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