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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, 22 December 22
CHINA TIGHTENS VERIFICATION OF SHIPS’ ENERGY CONSUMPTION DATA - GARD
From 22 December 2022, ships trading to Chinese ports must record their energy consumption data in accordance with the requirements of their Ship E ...
Thursday, 22 December 22
AN OVERVIEW OF THE LNG MARKET - VESSELSVALUE
LNG values have continued to strengthen, spurred by skyrocketing earnings that have surpassed last year’s record breaking peaks. In November, ...
Thursday, 22 December 22
COKING COAL SLUMPS AS TALKS ON AUSTRALIA-CHINA TRADE RIFT LOOM - REUTERS
Chinese coking coal futures dropped more than 3 per cent on Tuesday (Dec 20), extending losses, as supply of the steelmaking input might increase i ...
Thursday, 22 December 22
COAL AND GAS PRICE CAPS MAY COMPOUND POLITICAL RISK FOR AUSTRALIAN CORPORATES - FITCH RATINGS
Australia’s introduction of temporary price caps on domestic sales of gas and coal used for electricity generation will probably have limited ...
Monday, 19 December 22
ENERGY CRISIS FUELS COAL COMEBACK IN GERMANY - REUTERS
Coal has made a comeback in Germany this year, as Europe’s largest economy turns to the dirty fuel to power it through an energy crisis.
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- Ministry of Mines - Canada
- Ambuja Cements Ltd - India
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Vedanta Resources Plc - India
- Deloitte Consulting - India
- GAC Shipping (India) Pvt Ltd
- Kohat Cement Company Ltd. - Pakistan
- Karbindo Abesyapradhi - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Baramulti Group, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- Indian Oil Corporation Limited
- Minerals Council of Australia
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Gujarat Sidhee Cement - India
- Energy Development Corp, Philippines
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- McConnell Dowell - Australia
- Indika Energy - Indonesia
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Trasteel International SA, Italy
- PowerSource Philippines DevCo
- TeaM Sual Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- Mintek Dendrill Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Renaissance Capital - South Africa
- Pendopo Energi Batubara - Indonesia
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Straits Asia Resources Limited - Singapore
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- San Jose City I Power Corp, Philippines
- Bulk Trading Sa - Switzerland
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- Orica Australia Pty. Ltd.
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- Mjunction Services Limited - India
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chamber of Mines of South Africa
- Bhoruka Overseas - Indonesia
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- Altura Mining Limited, Indonesia
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Wilmar Investment Holdings
- India Bulls Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Makarim & Taira - Indonesia
- CNBM International Corporation - China
- Georgia Ports Authority, United States
- Timah Investasi Mineral - Indoneisa
- Meralco Power Generation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- Jindal Steel & Power Ltd - India
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ministry of Finance - Indonesia
- Kideco Jaya Agung - Indonesia
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Iligan Light & Power Inc, Philippines
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- Jaiprakash Power Ventures ltd
- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Kumho Petrochemical, South Korea
- Globalindo Alam Lestari - Indonesia
- Medco Energi Mining Internasional
- Global Green Power PLC Corporation, Philippines
- Economic Council, Georgia
- Latin American Coal - Colombia
- Riau Bara Harum - Indonesia
- Sakthi Sugars Limited - India
- Borneo Indobara - Indonesia
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- ICICI Bank Limited - India
- Mercuria Energy - Indonesia
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Parliament of New Zealand
- Xindia Steels Limited - India
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- London Commodity Brokers - England
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- Port Waratah Coal Services - Australia
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Sical Logistics Limited - India
- Semirara Mining and Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Thiess Contractors Indonesia
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Barasentosa Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Maheswari Brothers Coal Limited - India
- Uttam Galva Steels Limited - India
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Lanco Infratech Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Therma Luzon, Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- New Zealand Coal & Carbon
- Bayan Resources Tbk. - Indonesia
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- Chettinad Cement Corporation Ltd - India
- Indogreen Group - Indonesia
- Sree Jayajothi Cements Limited - India
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- Dalmia Cement Bharat India
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
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