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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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Saturday, 25 February 23
INDONESIA IS STILL BY FAR THE TOP SUPPLIER OF COAL TO CHINA - BANCHERO COSTA
After a slow start in the first quarter, global coal trade has really picked up pace last year, and is now fully back to pre-Covid levels, said ban ...
Wednesday, 22 February 23
MARKET INSIGHT - INTERMODAL
The short-term outlook of the global soybean market is currently pivoted by a combination of weather patterns that are affecting the harvest progre ...
Saturday, 18 February 23
OIL UNLIKELY TO BREAK ABOVE $100/BBL THIS YEAR, J.P.MORGAN SAYS –- REUTERS
Brent oil prices are unlikely to breach the $100 a barrel level this year, barring any significant geopolitical drivers, with OPEC+ potentially add ...
Saturday, 18 February 23
CHINA'S COAL PRICES FALL TO 1 YR-LOW, CLOUDING DEMAND AND IMPORT OUTLOOK - REUTERS
China’s thermal coal prices hit their lowest levels in a year this week on rising inventories as domestic mine production is recovering faste ...
Saturday, 18 February 23
PAKISTAN PLANS TO QUADRUPLE DOMESTIC COAL-FIRED POWER, MOVE AWAY FROM GAS - REUTERS
Pakistan plans to quadruple its domestic coal-fired capacity to reduce power generation costs and will not build new gas-fired plants in the coming ...
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- Standard Chartered Bank - UAE
- SN Aboitiz Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Renaissance Capital - South Africa
- Vizag Seaport Private Limited - India
- Romanian Commodities Exchange
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- London Commodity Brokers - England
- Billiton Holdings Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- Bharathi Cement Corporation - India
- GMR Energy Limited - India
- Ceylon Electricity Board - Sri Lanka
- Electricity Authority, New Zealand
- Ind-Barath Power Infra Limited - India
- Petron Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- Posco Energy - South Korea
- Planning Commission, India
- Goldman Sachs - Singapore
- Metalloyd Limited - United Kingdom
- Bangladesh Power Developement Board
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- Economic Council, Georgia
- Baramulti Group, Indonesia
- Larsen & Toubro Limited - India
- Pendopo Energi Batubara - Indonesia
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sree Jayajothi Cements Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- Central Java Power - Indonesia
- Indonesian Coal Mining Association
- The State Trading Corporation of India Ltd
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- Carbofer General Trading SA - India
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- ASAPP Information Group - India
- Tamil Nadu electricity Board
- Global Coal Blending Company Limited - Australia
- Semirara Mining Corp, Philippines
- Thiess Contractors Indonesia
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Electricity Generating Authority of Thailand
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- LBH Netherlands Bv - Netherlands
- Edison Trading Spa - Italy
- Indian Energy Exchange, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Ministry of Mines - Canada
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Karaikal Port Pvt Ltd - India
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bhushan Steel Limited - India
- Energy Link Ltd, New Zealand
- Mjunction Services Limited - India
- GVK Power & Infra Limited - India
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- Indogreen Group - Indonesia
- Vedanta Resources Plc - India
- Bukit Makmur.PT - Indonesia
- Interocean Group of Companies - India
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Straits Asia Resources Limited - Singapore
- Formosa Plastics Group - Taiwan
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Ministry of Finance - Indonesia
- Indika Energy - Indonesia
- Thai Mozambique Logistica
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- Eastern Energy - Thailand
- Central Electricity Authority - India
- Essar Steel Hazira Ltd - India
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- New Zealand Coal & Carbon
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- Madhucon Powers Ltd - India
- Heidelberg Cement - Germany
- PowerSource Philippines DevCo
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Bulk Trading Sa - Switzerland
- Mercator Lines Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coalindo Energy - Indonesia
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Commonwealth Bank - Australia
- The University of Queensland
- Bhoruka Overseas - Indonesia
- South Luzon Thermal Energy Corporation
- Energy Development Corp, Philippines
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- SMC Global Power, Philippines
- Africa Commodities Group - South Africa
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- PNOC Exploration Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- Minerals Council of Australia
- Coal and Oil Company - UAE
- Timah Investasi Mineral - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Georgia Ports Authority, United States
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Xindia Steels Limited - India
- Singapore Mercantile Exchange
- McConnell Dowell - Australia
- Mercuria Energy - Indonesia
- Tata Chemicals Ltd - India
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- Kideco Jaya Agung - Indonesia
- Siam City Cement - Thailand
- Medco Energi Mining Internasional
- Bukit Asam (Persero) Tbk - Indonesia
- Jaiprakash Power Ventures ltd
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