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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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- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Sinarmas Energy and Mining - Indonesia
- Ministry of Transport, Egypt
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- Bukit Makmur.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- Globalindo Alam Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- Ambuja Cements Ltd - India
- IEA Clean Coal Centre - UK
- Indian Oil Corporation Limited
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
- Salva Resources Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kaltim Prima Coal - Indonesia
- Georgia Ports Authority, United States
- Toyota Tsusho Corporation, Japan
- Semirara Mining and Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Borneo Indobara - Indonesia
- Standard Chartered Bank - UAE
- Central Electricity Authority - India
- Indian Energy Exchange, India
- White Energy Company Limited
- Vedanta Resources Plc - India
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- ASAPP Information Group - India
- India Bulls Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Indonesian Coal Mining Association
- Grasim Industreis Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Deloitte Consulting - India
- Posco Energy - South Korea
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- Simpson Spence & Young - Indonesia
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- PTC India Limited - India
- Port Waratah Coal Services - Australia
- PetroVietnam Power Coal Import and Supply Company
- SN Aboitiz Power Inc, Philippines
- Mercator Lines Limited - India
- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- Meenaskhi Energy Private Limited - India
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Power Finance Corporation Ltd., India
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- Attock Cement Pakistan Limited
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Semirara Mining Corp, Philippines
- Gujarat Sidhee Cement - India
- PowerSource Philippines DevCo
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Edison Trading Spa - Italy
- Larsen & Toubro Limited - India
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Intertek Mineral Services - Indonesia
- Central Java Power - Indonesia
- Renaissance Capital - South Africa
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- Chamber of Mines of South Africa
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Star Paper Mills Limited - India
- Meralco Power Generation, Philippines
- VISA Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- GAC Shipping (India) Pvt Ltd
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- Jindal Steel & Power Ltd - India
- Energy Development Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Bangladesh Power Developement Board
- Binh Thuan Hamico - Vietnam
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Formosa Plastics Group - Taiwan
- Siam City Cement - Thailand
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- Tata Chemicals Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- Karbindo Abesyapradhi - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- Anglo American - United Kingdom
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Maheswari Brothers Coal Limited - India
- Coal and Oil Company - UAE
- Bulk Trading Sa - Switzerland
- Miang Besar Coal Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Independent Power Producers Association of India
- Directorate Of Revenue Intelligence - India
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- Karaikal Port Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Ind-Barath Power Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Australian Commodity Traders Exchange
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- Cigading International Bulk Terminal - Indonesia
- The Treasury - Australian Government
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