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