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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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Monday, 31 October 22
CHINA COAL OUTPUT UP 12.3 PCT IN SEPTEMBER - XINHUA
China’s raw coal output posted stable expansion in September, official data showed.
The country produced 390 million tonnes of ...
Wednesday, 26 October 22
BIMCO PUBLISHES UPDATED GENCON CONTRACT
BIMCO has published a revised and updated version GENCON 2022 – one of its flagship contracts within its portfolio of standard contracts for ...
Monday, 24 October 22
KOSPO TO INVITE 400,000 MT OF COAL FOR 3 YEARS
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an international tender for 400,000 MT of 3,800 - 4,400kcal/kg NCV and Sulfur Max 0 ...
Wednesday, 19 October 22
ASIA COULD BE A BRIGHT SPOT AMID GLOBAL DOWNTURN NEXT YEAR, ECONOMISTS SAY - CNBC
Asia — especially Southeast Asia — remains a bright spot, even as the global economy looks set to head into recession next year, econom ...
Wednesday, 19 October 22
WHAT WILL THE GAS MARKET LOOK LIKE IN A NET ZERO WORLD? - WOOD MACKENZIE
The global gas and LNG market faces a number of ‘great unknowns’. With the market in turmoil uncertainty abounds – from the scale ...
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- LBH Netherlands Bv - Netherlands
- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- Kartika Selabumi Mining - Indonesia
- Sojitz Corporation - Japan
- CIMB Investment Bank - Malaysia
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Cement Manufacturers Association - India
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement PLC, Thailand
- SN Aboitiz Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
- Uttam Galva Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Coastal Gujarat Power Limited - India
- Binh Thuan Hamico - Vietnam
- Orica Mining Services - Indonesia
- Jaiprakash Power Ventures ltd
- Interocean Group of Companies - India
- Mercator Lines Limited - India
- Banpu Public Company Limited - Thailand
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- Iligan Light & Power Inc, Philippines
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- Port Waratah Coal Services - Australia
- Neyveli Lignite Corporation Ltd, - India
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- Cigading International Bulk Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Commonwealth Bank - Australia
- Eastern Coal Council - USA
- Economic Council, Georgia
- Minerals Council of Australia
- Anglo American - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Standard Chartered Bank - UAE
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- Salva Resources Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- Indian Energy Exchange, India
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- Australian Coal Association
- Latin American Coal - Colombia
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- Central Java Power - Indonesia
- Marubeni Corporation - India
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Kaltim Prima Coal - Indonesia
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- Kepco SPC Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Independent Power Producers Association of India
- Aboitiz Power Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Straits Asia Resources Limited - Singapore
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- The University of Queensland
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- MS Steel International - UAE
- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Tata Chemicals Ltd - India
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Makarim & Taira - Indonesia
- Agrawal Coal Company - India
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- Bulk Trading Sa - Switzerland
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
- PTC India Limited - India
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- Rio Tinto Coal - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Riau Bara Harum - Indonesia
- Planning Commission, India
- Jorong Barutama Greston.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- Siam City Cement - Thailand
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- Larsen & Toubro Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Deloitte Consulting - India
- Therma Luzon, Inc, Philippines
- The State Trading Corporation of India Ltd
- White Energy Company Limited
- South Luzon Thermal Energy Corporation
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- AsiaOL BioFuels Corp., Philippines
- Madhucon Powers Ltd - India
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- OPG Power Generation Pvt Ltd - India
- Indika Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Development Corp, Philippines
- Intertek Mineral Services - Indonesia
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bhatia International Limited - India
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- Eastern Energy - Thailand
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- ICICI Bank Limited - India
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- European Bulk Services B.V. - Netherlands
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Mercuria Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
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