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