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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, 18 February 23
2023 MARINE FUEL MARKET PREDICTIONS - JOHN BERGMAN, AURAMARINE
The drive for decarbonisation we witnessed in 2022 has continued into 2023, demonstrating the shipping’s industry positive strides in the fas ...
Saturday, 28 January 23
COAL GROWTH BLIP NOT TO BE REPEATED - BALTIC EXCHANGE
As 2022 drew to a close, global coal demand looked set to end the year just 1.2% up on the previous year. But that small increase was enough to pus ...
Thursday, 26 January 23
CHINA'S COAL OUTPUT INCREASES IN DECEMBER 2022 - XINHUA
China’s raw coal output posted stable expansion in December 2022, official data showed.
The country produced 400 million tonne ...
Thursday, 26 January 23
COKING COAL NARROWS THE GAP ON THERMAL AS CHINA REOPENS - REUTERS
The premium of high-grade thermal coal over coking coal in Asia is shrinking as China’s re-opening and ending of a ban on imports from Austra ...
Thursday, 26 January 23
AUSTRALIA'S CORONADO GLOBAL SEES COAL PRICES RISING ON RESUMING CHINA IMPORTS - REUTERS
Australia’s Coronado Global Resources said on Tuesday resuming metallurgical coal imports to China would likely push sea-borne coal prices hi ...
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- Vedanta Resources Plc - India
- Chettinad Cement Corporation Ltd - India
- PNOC Exploration Corporation - Philippines
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- ASAPP Information Group - India
- LBH Netherlands Bv - Netherlands
- Kartika Selabumi Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- White Energy Company Limited
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- Coal and Oil Company - UAE
- Renaissance Capital - South Africa
- Holcim Trading Pte Ltd - Singapore
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- Aditya Birla Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
- Electricity Generating Authority of Thailand
- Australian Coal Association
- Videocon Industries ltd - India
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Georgia Ports Authority, United States
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- IEA Clean Coal Centre - UK
- The Treasury - Australian Government
- Global Coal Blending Company Limited - Australia
- Planning Commission, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- Antam Resourcindo - Indonesia
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Eastern Coal Council - USA
- Cigading International Bulk Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Krishnapatnam Port Company Ltd. - India
- Bahari Cakrawala Sebuku - Indonesia
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- Malabar Cements Ltd - India
- Parliament of New Zealand
- Global Green Power PLC Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Riau Bara Harum - Indonesia
- Commonwealth Bank - Australia
- McConnell Dowell - Australia
- Tata Chemicals Ltd - India
- Independent Power Producers Association of India
- Australian Commodity Traders Exchange
- Petron Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Banpu Public Company Limited - Thailand
- India Bulls Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- Manunggal Multi Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- TeaM Sual Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Larsen & Toubro Limited - India
- Metalloyd Limited - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- South Luzon Thermal Energy Corporation
- PTC India Limited - India
- Directorate Of Revenue Intelligence - India
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- Wilmar Investment Holdings
- Star Paper Mills Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Agrawal Coal Company - India
- Neyveli Lignite Corporation Ltd, - India
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- GAC Shipping (India) Pvt Ltd
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Vizag Seaport Private Limited - India
- Karaikal Port Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- Semirara Mining Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Indian Oil Corporation Limited
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- Bayan Resources Tbk. - Indonesia
- Africa Commodities Group - South Africa
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- Xindia Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Oldendorff Carriers - Singapore
- Deloitte Consulting - India
- Eastern Energy - Thailand
- Energy Development Corp, Philippines
- Ambuja Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Rio Tinto Coal - Australia
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Indika Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Global Business Power Corporation, Philippines
- CNBM International Corporation - China
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- MS Steel International - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- SMG Consultants - Indonesia
- Indogreen Group - Indonesia
- Port Waratah Coal Services - Australia
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- Uttam Galva Steels Limited - India
- Central Java Power - Indonesia
- Energy Link Ltd, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Wood Mackenzie - Singapore
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