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