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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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Saturday, 06 August 22
SUMITOMO Q1 PROFIT RISES 45% ON STRONGER PRICES OF COAL, NICKEL - REUTERS
Japanese trading house Sumitomo Corp 8053.T said on Wednesday its net profit for the April-June quarter rose 45% to a record thanks to higher price ...
Saturday, 06 August 22
GERMANY'S ENERGY U-TURN: COAL INSTEAD OF GAS - DEUTSCHE WELLE
Berlin has realized it will never again import as much energy from Russia as before the Ukraine war. So the challenge is to wean Germany off its de ...
Saturday, 30 July 22
NUANCES OF FORCE MAJEURE CLAUSE - BALTIC EXCHANGE
Knowledge to Elevate
In NKD Maritime Limited v. Bart Maritime (No 2) Inc (Shagang Giant) [2022] EWHC 1615 (Comm), Bart Maritime (No 2) Inc (th ...
Saturday, 30 July 22
AEMO URGES QUICKER SHIFT TO RENEWABLES AMID COAL FAILURES AND SOARING FOSSIL FUEL COSTS
The Australian Energy Market Operator has called for an accelerated shift to wind and solar, backed up by batteries and other storage, as a devasta ...
Friday, 29 July 22
GLENCORE TO SUPPLY COAL TO NIPPON STEEL AT $375 PER TON - BLOOMBERG
Glencore Plc, agreed to supply coal to Nippon Steel at one of the highest prices ever paid by the Japan Bloomberg reported on July 27.
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- Bhoruka Overseas - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Eastern Coal Council - USA
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Romanian Commodities Exchange
- Sojitz Corporation - Japan
- Minerals Council of Australia
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Interocean Group of Companies - India
- Iligan Light & Power Inc, Philippines
- Borneo Indobara - Indonesia
- India Bulls Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Kideco Jaya Agung - Indonesia
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Attock Cement Pakistan Limited
- Krishnapatnam Port Company Ltd. - India
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Videocon Industries ltd - India
- Kobexindo Tractors - Indoneisa
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- Central Java Power - Indonesia
- Trasteel International SA, Italy
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Formosa Plastics Group - Taiwan
- Indian Energy Exchange, India
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Banpu Public Company Limited - Thailand
- Orica Mining Services - Indonesia
- Standard Chartered Bank - UAE
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- Cement Manufacturers Association - India
- Planning Commission, India
- PTC India Limited - India
- Thai Mozambique Logistica
- Salva Resources Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Coalindo Energy - Indonesia
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Sidhee Cement - India
- Maharashtra Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Ambuja Cements Ltd - India
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Indian Oil Corporation Limited
- Price Waterhouse Coopers - Russia
- TeaM Sual Corporation - Philippines
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining Corp, Philippines
- Grasim Industreis Ltd - India
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- Latin American Coal - Colombia
- Mjunction Services Limited - India
- Power Finance Corporation Ltd., India
- Energy Link Ltd, New Zealand
- Aboitiz Power Corporation - Philippines
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- The Treasury - Australian Government
- Essar Steel Hazira Ltd - India
- Mintek Dendrill Indonesia
- GVK Power & Infra Limited - India
- Coal and Oil Company - UAE
- Medco Energi Mining Internasional
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- San Jose City I Power Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Central Electricity Authority - India
- Anglo American - United Kingdom
- Therma Luzon, Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- Lanco Infratech Ltd - India
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Australian Commodity Traders Exchange
- Energy Development Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Mercuria Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Tamil Nadu electricity Board
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- London Commodity Brokers - England
- Simpson Spence & Young - Indonesia
- Siam City Cement PLC, Thailand
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Global Green Power PLC Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Parry Sugars Refinery, India
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- Karbindo Abesyapradhi - Indoneisa
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
- OPG Power Generation Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- LBH Netherlands Bv - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Ind-Barath Power Infra Limited - India
- White Energy Company Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- Antam Resourcindo - Indonesia
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Petron Corporation, Philippines
- Independent Power Producers Association of India
- Sinarmas Energy and Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Thiess Contractors Indonesia
- Malabar Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Bhushan Steel Limited - India
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- European Bulk Services B.V. - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- Star Paper Mills Limited - India
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- ASAPP Information Group - India
- The University of Queensland
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