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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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Monday, 12 November 18
COAL BUSINESS REMAINS PROSPECTIVE - ANTARA
Coal business happened to be sluggish in the 2012-2015 period because coal prices in the world market fell sharply, but it has begun to crawl up si ...
Monday, 12 November 18
INDONESIA'S HBA ENDS DECLINE IN NOVEMBER
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
Wednesday, 07 November 18
SHIPPING MARKET INSIGHT - VASILIS MOIRIS
This has been another active week in the second-hand market for both the dry bulk and tanker sectors. Buying interest has recently increased, which ...
Monday, 05 November 18
TIGHTER FUEL RULES COULD RAISE SHIPOWNERS' COSTS AND CAPEX - FITCH RATINGS
More stringent fuel regulations regarding sulphur content could significantly increase global shipping companies’ operating costs and capex n ...
Friday, 02 November 18
COAL FETCHES 102% PREMIUM IN E-AUCTION, SURPASSING THE EARLIER HIGHEST OF 95% - FINANCIAL EXPRESS
Coal prices have received a premium of 102% in spot e-auction during September 2018, surpassing the earlier highest of 95% premium during the spot ...
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- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- Kohat Cement Company Ltd. - Pakistan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Eastern Energy - Thailand
- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- Toyota Tsusho Corporation, Japan
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- Africa Commodities Group - South Africa
- Videocon Industries ltd - India
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Agrawal Coal Company - India
- Bahari Cakrawala Sebuku - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- SMC Global Power, Philippines
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- New Zealand Coal & Carbon
- Billiton Holdings Pty Ltd - Australia
- Vedanta Resources Plc - India
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Australian Coal Association
- Central Java Power - Indonesia
- Bulk Trading Sa - Switzerland
- Ministry of Transport, Egypt
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Anglo American - United Kingdom
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Posco Energy - South Korea
- Kartika Selabumi Mining - Indonesia
- Power Finance Corporation Ltd., India
- IEA Clean Coal Centre - UK
- Cigading International Bulk Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- Karaikal Port Pvt Ltd - India
- Central Electricity Authority - India
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Romanian Commodities Exchange
- Independent Power Producers Association of India
- Offshore Bulk Terminal Pte Ltd, Singapore
- SMG Consultants - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- London Commodity Brokers - England
- Ministry of Mines - Canada
- Cement Manufacturers Association - India
- Dalmia Cement Bharat India
- Attock Cement Pakistan Limited
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Sojitz Corporation - Japan
- Deloitte Consulting - India
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vizag Seaport Private Limited - India
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- Price Waterhouse Coopers - Russia
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Grasim Industreis Ltd - India
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- Tata Chemicals Ltd - India
- Renaissance Capital - South Africa
- Larsen & Toubro Limited - India
- Samtan Co., Ltd - South Korea
- Salva Resources Pvt Ltd - India
- GMR Energy Limited - India
- Petron Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Lanco Infratech Ltd - India
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- Star Paper Mills Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Meralco Power Generation, Philippines
- Oldendorff Carriers - Singapore
- Chettinad Cement Corporation Ltd - India
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Baramulti Group, Indonesia
- Latin American Coal - Colombia
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Bukit Baiduri Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Mintek Dendrill Indonesia
- Electricity Generating Authority of Thailand
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- Sical Logistics Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Medco Energi Mining Internasional
- Kumho Petrochemical, South Korea
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- India Bulls Power Limited - India
- Gujarat Sidhee Cement - India
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- Merrill Lynch Commodities Europe
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- The University of Queensland
- Global Business Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Energy Development Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Australian Commodity Traders Exchange
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Indian Energy Exchange, India
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- PNOC Exploration Corporation - Philippines
- Marubeni Corporation - India
- Bayan Resources Tbk. - Indonesia
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- MS Steel International - UAE
- Minerals Council of Australia
- San Jose City I Power Corp, Philippines
- Uttam Galva Steels Limited - India
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