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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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Tuesday, 21 January 20
THERMAL COAL PRICES SET FOR RECOVERY THIS YEAR AS OVERSUPPLY TIGHTENS - REUTERS
Thermal coal prices are expected to recover this year after losing around a third of their value last year as demand from some south-east Asian cou ...
Monday, 20 January 20
INDIA TO STOP SUBSTITUTABLE COAL IMPORT; CAN GO FOR AUCTION OF 100 FULLY EXPLORED NEW BLOCKS: JOSHI - PTI
The Cabinet recently approved promulgation of Mineral Laws (Amendment) Ordinance 2020 to amend Mines and Minerals (Development and Regulation ) Act ...
Monday, 20 January 20
CHINA DECEMBER COAL OUTPUT UP 2.4 PERCENT ON YEAR - STATS BUREAU: REUTERS
China produced 331.74 million tonnes of coal in December, up 2.4 percent on the year, the National Bureau of Statistics said on Friday.
...
Monday, 20 January 20
CHINA IMPORTED 124.4 MLN TONNES OF COAL FROM INDONESIA IN 2019, UP 15.1 PERCENT YOY - BANCHERO COSTA
China's coal imports raced ahead in 2019, surprising many who had expected that in the months of 2019 to come the government would clamp down s ...
Saturday, 18 January 20
BIMCO: LOW-SULPHUR FUEL SALE JUMPS TO A 70% SHARE IN SINGAPORE, AS THE IMO 2020 SULPHUR CAP KICKS IN
The final quarter of 2019 marked a massive decline of HSFO sales, as the industry transitioned into compliance of the IMO 2020 Sulphur Cap (IMO2020 ...
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- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- Posco Energy - South Korea
- Eastern Energy - Thailand
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- The Treasury - Australian Government
- Mercator Lines Limited - India
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Barasentosa Lestari - Indonesia
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
- TeaM Sual Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Australian Commodity Traders Exchange
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- Central Java Power - Indonesia
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- South Luzon Thermal Energy Corporation
- Global Coal Blending Company Limited - Australia
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- Wilmar Investment Holdings
- SMG Consultants - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meenaskhi Energy Private Limited - India
- VISA Power Limited - India
- ASAPP Information Group - India
- Central Electricity Authority - India
- Mjunction Services Limited - India
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Toyota Tsusho Corporation, Japan
- Holcim Trading Pte Ltd - Singapore
- Goldman Sachs - Singapore
- Energy Development Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Finance - Indonesia
- Planning Commission, India
- Bukit Asam (Persero) Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bharathi Cement Corporation - India
- Bukit Makmur.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- San Jose City I Power Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Kobexindo Tractors - Indoneisa
- ICICI Bank Limited - India
- Ministry of Mines - Canada
- Vedanta Resources Plc - India
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- India Bulls Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- IEA Clean Coal Centre - UK
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- Independent Power Producers Association of India
- GMR Energy Limited - India
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- Power Finance Corporation Ltd., India
- Indian Oil Corporation Limited
- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
- Indogreen Group - Indonesia
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Vizag Seaport Private Limited - India
- Bangladesh Power Developement Board
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- Cement Manufacturers Association - India
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- Minerals Council of Australia
- Lanco Infratech Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Rashtriya Ispat Nigam Limited - India
- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- Energy Link Ltd, New Zealand
- Therma Luzon, Inc, Philippines
- Banpu Public Company Limited - Thailand
- OPG Power Generation Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Sindya Power Generating Company Private Ltd
- Siam City Cement PLC, Thailand
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Commonwealth Bank - Australia
- Agrawal Coal Company - India
- Economic Council, Georgia
- Petron Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- Formosa Plastics Group - Taiwan
- GVK Power & Infra Limited - India
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- Deloitte Consulting - India
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- Indonesian Coal Mining Association
- Iligan Light & Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- PetroVietnam Power Coal Import and Supply Company
- Tata Chemicals Ltd - India
- Marubeni Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhatia International Limited - India
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- Chamber of Mines of South Africa
- Timah Investasi Mineral - Indoneisa
- Singapore Mercantile Exchange
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- Siam City Cement - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Leighton Contractors Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Indian Energy Exchange, India
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Larsen & Toubro Limited - India
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Mercuria Energy - Indonesia
- MS Steel International - UAE
- Gujarat Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Trasteel International SA, Italy
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- Bulk Trading Sa - Switzerland
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