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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, 12 December 19
KOWEPO INVITING BIDS FOR 2.28 MILLION TONS OF MIN.4,400 NCV COAL
COALspot.com: South Korea’s Korea Western Power Co., Ltd. (KOWEPO) has issued an international tender for total 2,280,000 tons of (Sub) Bitum ...
Wednesday, 11 December 19
PANAMAX: THE MARKET REMAINED FIRM IN THE PACIFIC, WITH INCREASED ACTIVITY NOTED IN KEY AREAS, SUCH AS INDONESIA - ALLIED
Capesize – Positive momentum was resumed this past week, with earnings mak-ing some gains once again. This rising pattern was reflected in th ...
Tuesday, 10 December 19
PREPARATIONS INTENSIFY AS IMO 2020 GLOBAL SULPHUR CAP LOOMS - STANDARD CLUB
With less than a month to go for the impending IMO 2020 global sulphur cap, the club has started witnessing dispute cases relating to the measureme ...
Monday, 09 December 19
KOREA SOUTHERN POWER CO LTD IS INVITING OFFERS FOR MIN 3700 NCV COAL
COALspot.com: South Korea’s Korea East-West Power Co. Ltd has issued an international tender for 160,000 Tons steam coal.
Acco ...
Saturday, 07 December 19
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
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- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- Uttam Galva Steels Limited - India
- Banpu Public Company Limited - Thailand
- Cement Manufacturers Association - India
- ASAPP Information Group - India
- Deloitte Consulting - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- Bangladesh Power Developement Board
- Economic Council, Georgia
- GMR Energy Limited - India
- White Energy Company Limited
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- MS Steel International - UAE
- Georgia Ports Authority, United States
- Antam Resourcindo - Indonesia
- Indonesian Coal Mining Association
- Mercuria Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- London Commodity Brokers - England
- Madhucon Powers Ltd - India
- CNBM International Corporation - China
- International Coal Ventures Pvt Ltd - India
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Indogreen Group - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Romanian Commodities Exchange
- Heidelberg Cement - Germany
- Asmin Koalindo Tuhup - Indonesia
- Metalloyd Limited - United Kingdom
- Kaltim Prima Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- Neyveli Lignite Corporation Ltd, - India
- Bhoruka Overseas - Indonesia
- Vizag Seaport Private Limited - India
- Orica Australia Pty. Ltd.
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- Anglo American - United Kingdom
- Australian Coal Association
- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- Independent Power Producers Association of India
- Orica Mining Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chamber of Mines of South Africa
- Global Coal Blending Company Limited - Australia
- South Luzon Thermal Energy Corporation
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Coastal Gujarat Power Limited - India
- Barasentosa Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- Pendopo Energi Batubara - Indonesia
- Port Waratah Coal Services - Australia
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Binh Thuan Hamico - Vietnam
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Bukit Baiduri Energy - Indonesia
- Ministry of Finance - Indonesia
- Karaikal Port Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- The University of Queensland
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Attock Cement Pakistan Limited
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Leighton Contractors Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Bhushan Steel Limited - India
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- Baramulti Group, Indonesia
- CIMB Investment Bank - Malaysia
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Bayan Resources Tbk. - Indonesia
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- Toyota Tsusho Corporation, Japan
- Commonwealth Bank - Australia
- Globalindo Alam Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- McConnell Dowell - Australia
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- Carbofer General Trading SA - India
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Eastern Energy - Thailand
- Straits Asia Resources Limited - Singapore
- Ministry of Mines - Canada
- Posco Energy - South Korea
- PowerSource Philippines DevCo
- The State Trading Corporation of India Ltd
- Global Business Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Bharathi Cement Corporation - India
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Bulk Trading Sa - Switzerland
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Commodity Traders Exchange
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- Edison Trading Spa - Italy
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- Lanco Infratech Ltd - India
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Ministry of Transport, Egypt
- Siam City Cement - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Parliament of New Zealand
- Thiess Contractors Indonesia
- SMC Global Power, Philippines
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- Gujarat Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- PTC India Limited - India
- Mintek Dendrill Indonesia
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Coal Council - USA
- Africa Commodities Group - South Africa
- Videocon Industries ltd - India
- TeaM Sual Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Sojitz Corporation - Japan
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