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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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Friday, 14 June 24
NEXTDECADE, SAUDI ARAMCO SIGN 20-YEAR LNG SUPPLY DEAL - REUTERS
U.S. liquefied natural gas (LNG) provider NextDecade has signed a non-binding agreement with Saudi Aramco 2222.SE to supply 1.2 million tonnes per ...
Friday, 14 June 24
NEWBUILDING PRICES CLIMB 3% TO HIGHEST LEVEL IN 16 YEARS - NIELS RASMUSSEN
“Since the start of the year, newbuilding prices have risen 3% to their highest level since 2008. Compared to their most recent low in late 2 ...
Friday, 14 June 24
INDIA TARGETS HIGHER DOMESTIC COAL PRODUCTION, REDUCED IMPORTS: GOVT - REUTERS
India wants to reduce coal imports and increase domestic production, federal coal minister G. Kishan Reddy said on Thursday.
The cou ...
Thursday, 13 June 24
US LNG TO ASIA FOR POWER GENERATION EXPECTED TO CUT EMISSIONS VERSUS COAL - RYSTAD ENERGY
The value-chain emissions of liquified natural gas (LNG) are lower on average than for coal-fired power generation, even when the fuel is shipp ...
Wednesday, 12 June 24
CHINA ACCOUNTS FOR 16.3% OF AUSTRALIA'S COAL EXPORTS, FOLLOWED BY INDIA 14.4% - BANCHERO COSTA
Global coal trade has really picked up pace in recent months, and is now fully back to pre-Covid levels says Banchero Costa in its latest report.
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- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Standard Chartered Bank - UAE
- Kepco SPC Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Savvy Resources Ltd - HongKong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Economic Council, Georgia
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Wood Mackenzie - Singapore
- Miang Besar Coal Terminal - Indonesia
- Indian Oil Corporation Limited
- Edison Trading Spa - Italy
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Price Waterhouse Coopers - Russia
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Vedanta Resources Plc - India
- India Bulls Power Limited - India
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Marubeni Corporation - India
- ICICI Bank Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Bahari Cakrawala Sebuku - Indonesia
- Malabar Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Latin American Coal - Colombia
- The State Trading Corporation of India Ltd
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- Semirara Mining and Power Corporation, Philippines
- GVK Power & Infra Limited - India
- PowerSource Philippines DevCo
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- MS Steel International - UAE
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- Renaissance Capital - South Africa
- SN Aboitiz Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- Planning Commission, India
- Larsen & Toubro Limited - India
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- Orica Australia Pty. Ltd.
- International Coal Ventures Pvt Ltd - India
- Deloitte Consulting - India
- Wilmar Investment Holdings
- Bukit Makmur.PT - Indonesia
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- Attock Cement Pakistan Limited
- Kartika Selabumi Mining - Indonesia
- Ministry of Transport, Egypt
- White Energy Company Limited
- Minerals Council of Australia
- The Treasury - Australian Government
- Altura Mining Limited, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Mines - Canada
- Parry Sugars Refinery, India
- Indogreen Group - Indonesia
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Makarim & Taira - Indonesia
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- GAC Shipping (India) Pvt Ltd
- Neyveli Lignite Corporation Ltd, - India
- Jaiprakash Power Ventures ltd
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Riau Bara Harum - Indonesia
- Mercuria Energy - Indonesia
- Siam City Cement - Thailand
- Romanian Commodities Exchange
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- McConnell Dowell - Australia
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Global Coal Blending Company Limited - Australia
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- Tamil Nadu electricity Board
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Electricity Authority, New Zealand
- Ind-Barath Power Infra Limited - India
- Bharathi Cement Corporation - India
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- Uttam Galva Steels Limited - India
- Jindal Steel & Power Ltd - India
- Parliament of New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- Coastal Gujarat Power Limited - India
- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- Timah Investasi Mineral - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meralco Power Generation, Philippines
- Coalindo Energy - Indonesia
- Bhushan Steel Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Sindya Power Generating Company Private Ltd
- GN Power Mariveles Coal Plant, Philippines
- Maheswari Brothers Coal Limited - India
- Energy Development Corp, Philippines
- Videocon Industries ltd - India
- Sarangani Energy Corporation, Philippines
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- The University of Queensland
- SMC Global Power, Philippines
- Power Finance Corporation Ltd., India
- Alfred C Toepfer International GmbH - Germany
- Krishnapatnam Port Company Ltd. - India
- Africa Commodities Group - South Africa
- Bulk Trading Sa - Switzerland
- Kalimantan Lumbung Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Chamber of Mines of South Africa
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- Australian Coal Association
- Iligan Light & Power Inc, Philippines
- Orica Mining Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- AsiaOL BioFuels Corp., Philippines
- Eastern Energy - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Sinarmas Energy and Mining - Indonesia
- ASAPP Information Group - India
- Tata Chemicals Ltd - India
- Trasteel International SA, Italy
- Merrill Lynch Commodities Europe
- Xindia Steels Limited - India
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- CNBM International Corporation - China
- Aditya Birla Group - India
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- Heidelberg Cement - Germany
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
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