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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, 15 November 22
CHINA SEES RISING COAL STORAGE AMID SUPPLY PUSH - XINHUA
Coal stockpiles at China’s power plants have seen considerable increases, ensuring energy supply for the winter, the country’s energy r ...
Tuesday, 15 November 22
SEABORNE THERMAL COAL PRICES START TO EASE, BUT PROCESS IS UNEVEN - REUTERS
Prices for seaborne thermal coal have started to drop as fears of a winter energy crunch ease, but the rate of decline has varied across the differ ...
Thursday, 10 November 22
INDIA: THERMAL PLANTS HAVE ADEQUATE COAL STOCKS AT 25.6 MILLION TONNES, SAYS GOVT - IANS
The coal stock with domestic dry fuel-based power plants, as on October 31, was 25.6 million tonnes, the government said, adding that the availabil ...
Tuesday, 08 November 22
OUTLOOK ON CHINA’S WEAKENED BASIC MATERIALS SECTOR CLOUDED BY POLICY SWINGS - FITCH RATINGS
Fitch Ratings expects basic materials demand in China to improve qoq in 4Q22, driven by seasonally higher construction activity, solid infrastructu ...
Friday, 04 November 22
CHINA EXPANDS COAL TERM CONTRACTS TO ALL MINES TO STABILIZE MARKET - REUTERS
China has expanded long-term thermal coal supply contracts for 2023 to all coal mines and asked power utilities to source more of their demand thro ...
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- Anglo American - United Kingdom
- GMR Energy Limited - India
- Global Coal Blending Company Limited - Australia
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- International Coal Ventures Pvt Ltd - India
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- London Commodity Brokers - England
- Gujarat Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Parliament of New Zealand
- Central Electricity Authority - India
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Marubeni Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Commonwealth Bank - Australia
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Finance - Indonesia
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Australian Commodity Traders Exchange
- Carbofer General Trading SA - India
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- Bhushan Steel Limited - India
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- Bukit Baiduri Energy - Indonesia
- Aditya Birla Group - India
- Uttam Galva Steels Limited - India
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- Africa Commodities Group - South Africa
- Kideco Jaya Agung - Indonesia
- Cement Manufacturers Association - India
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Wood Mackenzie - Singapore
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- MS Steel International - UAE
- Gujarat Mineral Development Corp Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Global Business Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- Romanian Commodities Exchange
- Independent Power Producers Association of India
- Mercator Lines Limited - India
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Therma Luzon, Inc, Philippines
- Renaissance Capital - South Africa
- Kartika Selabumi Mining - Indonesia
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- IEA Clean Coal Centre - UK
- Dalmia Cement Bharat India
- Madhucon Powers Ltd - India
- Latin American Coal - Colombia
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- McConnell Dowell - Australia
- Kapuas Tunggal Persada - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Borneo Indobara - Indonesia
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- Karaikal Port Pvt Ltd - India
- Coal and Oil Company - UAE
- Neyveli Lignite Corporation Ltd, - India
- Thai Mozambique Logistica
- Orica Mining Services - Indonesia
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- Ministry of Transport, Egypt
- Vizag Seaport Private Limited - India
- Electricity Authority, New Zealand
- Interocean Group of Companies - India
- Bharathi Cement Corporation - India
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- Sakthi Sugars Limited - India
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Pendopo Energi Batubara - Indonesia
- Goldman Sachs - Singapore
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Tata Chemicals Ltd - India
- Larsen & Toubro Limited - India
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Indika Energy - Indonesia
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- VISA Power Limited - India
- Economic Council, Georgia
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Eastern Energy - Thailand
- Siam City Cement - Thailand
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- Tamil Nadu electricity Board
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Siam City Cement PLC, Thailand
- Riau Bara Harum - Indonesia
- Indogreen Group - Indonesia
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Globalindo Alam Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Semirara Mining and Power Corporation, Philippines
- Heidelberg Cement - Germany
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- Iligan Light & Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
- The University of Queensland
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- Sinarmas Energy and Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- IHS Mccloskey Coal Group - USA
- Maheswari Brothers Coal Limited - India
- Bhatia International Limited - India
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
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