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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, 19 July 22
WHY SHIPPING MIGHT BE ABOUT TO GET A LITTLE BIT SLOWER - WORLD ECONOMIC FORUM
If shipping is the beating heart of global trade, its pulse is about to get slower.
Faced with uncertainty about which fuels to use in the long ...
Tuesday, 19 July 22
GERMANY'S INCREASED COAL, OIL USE WILL BE TEMPORARY, SCHOLZ SAYS - CNBC
Chancellor Olaf Scholz says Germany’s decision to reactivate coal and oil-fired power plants to relieve energy shortages because of the war i ...
Tuesday, 19 July 22
INDONESIA REMOVES PALM OIL EXPORT LEVY UNTIL AUG. 31 - REUTERS
Indonesia has scrapped its export levy for all palm oil products until Aug. 31 in a fresh attempt to boost exports and ease high inventories, finan ...
Tuesday, 19 July 22
CHINA'S JUNE DAILY COAL OUTPUT JUMPS ON PEAK SUMMER DEMAND - REUTERS
China’s daily coal output in June rose 6.6 per cent from a month earlier as miners cranked up output ahead of peak summer temperatures, when ...
Tuesday, 19 July 22
SEEING RED? - WOOD MACKENZIE
What a Republican mid-term victory could mean for US energy and climate policy
According to current polling the Republican Party has ...
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- Port Waratah Coal Services - Australia
- Mercator Lines Limited - India
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- Bharathi Cement Corporation - India
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- Sindya Power Generating Company Private Ltd
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Jaiprakash Power Ventures ltd
- Sinarmas Energy and Mining - Indonesia
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- Goldman Sachs - Singapore
- Orica Australia Pty. Ltd.
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Pendopo Energi Batubara - Indonesia
- Baramulti Group, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Toyota Tsusho Corporation, Japan
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Indian Energy Exchange, India
- Directorate Of Revenue Intelligence - India
- Sical Logistics Limited - India
- Karaikal Port Pvt Ltd - India
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Malabar Cements Ltd - India
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- Standard Chartered Bank - UAE
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
- Siam City Cement - Thailand
- Global Coal Blending Company Limited - Australia
- Bangladesh Power Developement Board
- Gujarat Mineral Development Corp Ltd - India
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- Therma Luzon, Inc, Philippines
- Parliament of New Zealand
- Semirara Mining Corp, Philippines
- Central Java Power - Indonesia
- Bukit Baiduri Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- Neyveli Lignite Corporation Ltd, - India
- PTC India Limited - India
- Vedanta Resources Plc - India
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- The Treasury - Australian Government
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- Commonwealth Bank - Australia
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- Orica Mining Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- GMR Energy Limited - India
- Riau Bara Harum - Indonesia
- McConnell Dowell - Australia
- Metalloyd Limited - United Kingdom
- Central Electricity Authority - India
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Agrawal Coal Company - India
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Sakthi Sugars Limited - India
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Bayan Resources Tbk. - Indonesia
- Intertek Mineral Services - Indonesia
- Indian Oil Corporation Limited
- Rio Tinto Coal - Australia
- Madhucon Powers Ltd - India
- Barasentosa Lestari - Indonesia
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bhatia International Limited - India
- Makarim & Taira - Indonesia
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Globalindo Alam Lestari - Indonesia
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Vizag Seaport Private Limited - India
- Sree Jayajothi Cements Limited - India
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
- Edison Trading Spa - Italy
- Eastern Coal Council - USA
- Mjunction Services Limited - India
- Eastern Energy - Thailand
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- Star Paper Mills Limited - India
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Grasim Industreis Ltd - India
- Gujarat Sidhee Cement - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
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