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Monday, 24 June 24
PLN'S FINANCIAL SUSTAINABILITY RESTS ON ACCELERATED COAL RETIREMENT AND RENEWABLES DEPLOYMENT - MUTYA YUSTIKA
 On 28 May 2024, Indonesia’s national electricity utility, PT Perusahaan Listrik Negara (PLN), released its financial report for 2023. Although the report showed a net profit increase of IDR22 trillion (tn), a 53% rise from 2022, the Institute for Energy Economics and Financial Analysis (IEEFA) calculates that PLN would have recorded a substantial loss of IDR120tn without subsidies and compensations from the Government of Indonesia (GOI).
At first glance, PLN’s cash reserves increased by 9% for the fiscal year 2023, and its electricity sales rose around 7%. This increase in sales contributed the most to PLN’s income growth, amounting to IDR22.2tn. However, despite the improved performance and positive figures, there are underlying red flags.
Despite increased cash reserves, PLN’s liquidity ratio (0.92), quick ratio (0.79), and cash ratio (0.39) were all below 1.00. These figures indicate that the utility is struggling to meet its urgent payment obligations with cash or current assets.
PLN’s financial performance heavily depends on GOI’s subsidies and compensations, which have risen by 16.4% from IDR123tn in 2022 to IDR143tn in 2023. However, these incremental increases could halt in 2025. Discussions at the Ministry of Finance are underway to reduce PLN’s subsidies and compensations under the new administration's programs and policies.
An imminent solution for PLN's financial independence is required. PLN's fiscal potential can be unlocked with minimal GOI assistance by improving efficiency, particularly by reducing operating costs through the adoption of renewables.
Reducing cost and volatility via renewables
The Basic Cost of Providing Electricity (BPP) is arguably the main factor determining electricity costs, which are then translated into tariffs paid by customers. Any increase in BPP adds to the GOI’s financial burden.
Since 2020, coal and gas purchase costs have increased significantly. In 2023, purchased electricity from coal and gas contributed to a 14% increase in operational expenses and accounted for 63% of total operating costs. On average, PLN spent around US$4-5 cents per kilowatt hour (¢/kWh) for coal purchases, almost 40% higher than in 2020.
Additionally, PLN’s exposure to US$-denominated coal prices requires reconsideration. Despite the GOI's coal price cap, PLN has struggled with coal price fluctuations due to exchange rate changes. While purchases are denominated in US$, PLN’s tariff collections are in Indonesian rupiahs.
Apart from the base fuel purchasing costs, PLN also had to factor in shipping and plant maintenance costs. As coal-fired power plants age, they lose efficiency and require more coal to produce each kilowatt hour (kWh) of electricity.
Considering the difficulty in reducing purchased electricity costs and renegotiating power purchase agreements with independent power producers, PLN should accelerate the transition from fossil fuel-based energy to avoid price volatility.
Renewable energy sources are low-cost to operate compared to fossil fuel power plants. Furthermore, IEEFA’s recent report has shown that the levelized cost of electricity is around US$4.78¢/kWh for solar and US$4.77¢/kWh for wind. In comparison, coal costs around US$6.5¢/kWh, which is at least US$1.7¢/kWh more.
Solar and wind are now the lowest-cost energy sources globally and are expected to become even cheaper by 2030. Notably, maintaining coal-fired power plants is more expensive than constructing entirely new, rapidly built renewable energy plants.
Consequently, the gradual retirement of coal-fired power plants and a concerted transition to renewable energy sources will be a win-win solution for Indonesia to fulfill its Paris Agreement commitments and financial goals.
Mutya Yustika, IEEFA
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Thursday, 23 January 20
COAL-BASED ELECTRICITY GENERATION SURGES 95% IN 2019 - PROFIT PAKISTAN TODAY
Coal-based power generation jumped 94.5 percent to 2,030 Gigawatt hours (GWh) in the year to November 2019, taking its share in the country’s ...
Wednesday, 22 January 20
INDIA: COAL PRODUCTION FROM CAPTIVE MINES RAISES 24% OUTPUT IN APRIL TO DECEMBER - FINANCIAL EXPRESS
Coal production from captive mines in the first nine months of the ongoing financial year was up 24% year-on-year (y-o-y) at 40.93 million tonne (M ...
Wednesday, 22 January 20
SHIPPING MARKET INSIGHT - INTERMODAL
It seems that we are finally seeing whitish smoke as far as the trade feud between the US and China is concerned, while following this much anticip ...
Tuesday, 21 January 20
IRON ORE - 5 THINGS TO WATCH IN 2020 - WOOD MACKENZIE
Wood Mackenzie identifies five trends that will impact the iron ore industry.
Slower demand growth (especially in China) and a decen ...
Tuesday, 21 January 20
ASIA'S APPETITE FOR COAL GROWS, WITH CHINA THE KEY DECIDER - NIKKEI
Although renewable power generation is expected to rise significantly in Asia, India’s vast electricity needs will still underpin global dema ...
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- GAC Shipping (India) Pvt Ltd
- Lanco Infratech Ltd - India
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Indogreen Group - Indonesia
- Salva Resources Pvt Ltd - India
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Uttam Galva Steels Limited - India
- Indika Energy - Indonesia
- Xindia Steels Limited - India
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- ASAPP Information Group - India
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- Romanian Commodities Exchange
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Bukit Baiduri Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- IEA Clean Coal Centre - UK
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- Deloitte Consulting - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- TNB Fuel Sdn Bhd - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Kaltim Prima Coal - Indonesia
- Electricity Authority, New Zealand
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Tamil Nadu electricity Board
- Eastern Coal Council - USA
- Meenaskhi Energy Private Limited - India
- Minerals Council of Australia
- White Energy Company Limited
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Formosa Plastics Group - Taiwan
- India Bulls Power Limited - India
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- Parry Sugars Refinery, India
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- Savvy Resources Ltd - HongKong
- Maheswari Brothers Coal Limited - India
- Semirara Mining and Power Corporation, Philippines
- PTC India Limited - India
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Economic Council, Georgia
- Larsen & Toubro Limited - India
- CIMB Investment Bank - Malaysia
- Kartika Selabumi Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Thai Mozambique Logistica
- Planning Commission, India
- Kalimantan Lumbung Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- CNBM International Corporation - China
- Chamber of Mines of South Africa
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- VISA Power Limited - India
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Simpson Spence & Young - Indonesia
- Pendopo Energi Batubara - Indonesia
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- IHS Mccloskey Coal Group - USA
- Semirara Mining Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Indonesian Coal Mining Association
- Chettinad Cement Corporation Ltd - India
- Merrill Lynch Commodities Europe
- Bahari Cakrawala Sebuku - Indonesia
- Thiess Contractors Indonesia
- Meralco Power Generation, Philippines
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Mercuria Energy - Indonesia
- Siam City Cement - Thailand
- Aboitiz Power Corporation - Philippines
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- Bulk Trading Sa - Switzerland
- Binh Thuan Hamico - Vietnam
- Coastal Gujarat Power Limited - India
- Sakthi Sugars Limited - India
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- Antam Resourcindo - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Medco Energi Mining Internasional
- Trasteel International SA, Italy
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Jaiprakash Power Ventures ltd
- Makarim & Taira - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Indian Energy Exchange, India
- Mintek Dendrill Indonesia
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Eastern Energy - Thailand
- Heidelberg Cement - Germany
- Bayan Resources Tbk. - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- LBH Netherlands Bv - Netherlands
- Independent Power Producers Association of India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Cement Manufacturers Association - India
- Coalindo Energy - Indonesia
- Interocean Group of Companies - India
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kapuas Tunggal Persada - Indonesia
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Transport, Egypt
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- MS Steel International - UAE
- Indian Oil Corporation Limited
- Toyota Tsusho Corporation, Japan
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Coal and Oil Company - UAE
- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Baramulti Group, Indonesia
- The Treasury - Australian Government
- The University of Queensland
- Leighton Contractors Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- Global Green Power PLC Corporation, Philippines
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