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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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Tuesday, 13 December 22
YANCOAL AUSTRALIA TO PREPAY $459 MLN DEBT AS RECORD COAL PRICES BOOST CASHFLOWS - REUTERS
Coal miner Yancoal Australia Ltd. said on Friday it intended to prepay $459 million of its debt on or around Dec. 16, as elevated coal prices were ...
Tuesday, 13 December 22
WHY COAL LEADS THE RISE IN COMMODITIES THIS YEAR - MARKETWATCH
This year marked a resurgence for coal, often known — and loathed — by environmentalists as the dirtiest energy source, with prices mor ...
Thursday, 08 December 22
BIMCO TO REVISE WAR RISK CLAUSES
Work to revise the BIMCO War Cancellation Clause 2004, the BIMCO War Risks Clause for Time Chartering 2013 (CONWARTIME 2013) and the BIMCO War Risk ...
Thursday, 08 December 22
COAL ROYALTY PAYMENTS BOOST AUSTRALIAN STATE'S BUDGET FORECAST - REUTERS
Australia’s Queensland state on Wednesday forecast a record surplus for the current financial year, largely driven by higher royalty payments ...
Wednesday, 07 December 22
MARKET INSIGHT - INTERMODAL
China’s coal imports from January to October were 230.1m mt, a decrease of around 10.7% y-o-y (2021 totalled 323.2m mt). The question is if t ...
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- Jindal Steel & Power Ltd - India
- PTC India Limited - India
- Tamil Nadu electricity Board
- ICICI Bank Limited - India
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- Kapuas Tunggal Persada - Indonesia
- Indo Tambangraya Megah - Indonesia
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- CIMB Investment Bank - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- Parry Sugars Refinery, India
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Electricity Authority, New Zealand
- Lanco Infratech Ltd - India
- International Coal Ventures Pvt Ltd - India
- Wilmar Investment Holdings
- Therma Luzon, Inc, Philippines
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- Chamber of Mines of South Africa
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- PowerSource Philippines DevCo
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- Semirara Mining and Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- Port Waratah Coal Services - Australia
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
- Planning Commission, India
- Eastern Coal Council - USA
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- White Energy Company Limited
- Sojitz Corporation - Japan
- Sarangani Energy Corporation, Philippines
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Mjunction Services Limited - India
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Xindia Steels Limited - India
- Sindya Power Generating Company Private Ltd
- MS Steel International - UAE
- Mintek Dendrill Indonesia
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Baramulti Group, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- Indogreen Group - Indonesia
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- Attock Cement Pakistan Limited
- Indonesian Coal Mining Association
- Iligan Light & Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Thai Mozambique Logistica
- Wood Mackenzie - Singapore
- Gujarat Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- CNBM International Corporation - China
- Agrawal Coal Company - India
- GAC Shipping (India) Pvt Ltd
- Aboitiz Power Corporation - Philippines
- Borneo Indobara - Indonesia
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Economic Council, Georgia
- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- VISA Power Limited - India
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- Madhucon Powers Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- South Luzon Thermal Energy Corporation
- Electricity Generating Authority of Thailand
- Mercator Lines Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Grasim Industreis Ltd - India
- Riau Bara Harum - Indonesia
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- PNOC Exploration Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- Australian Coal Association
- Power Finance Corporation Ltd., India
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- OPG Power Generation Pvt Ltd - India
- Anglo American - United Kingdom
- Marubeni Corporation - India
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- Karaikal Port Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Java Power - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
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