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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$1.7¢/kWh more.
Solar and wind are now the lowest-cost energy sources globally and are expected to become even cheaper by 2030. Notably, maintaining coal-fired power plants is more expensive than constructing entirely new, rapidly built renewable energy plants.
Consequently, the gradual retirement of coal-fired power plants and a concerted transition to renewable energy sources will be a win-win solution for Indonesia to fulfill its Paris Agreement commitments and financial goals.
Mutya Yustika, IEEFA
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Friday, 08 July 22
AUSTRALIAN COAL PRICE BREAKS AGAIN LEVEL US$ 400/TON!, UP AROUND 4% - CNBC INDONESIA
Coal prices shot up again and crossed the level of US$ 400 per ton. On Thursday (7/7/2022) trading, the selling price of August contract closed at ...
Friday, 08 July 22
INDONESIA MULLS MORE FREQUENT SETTING OF CRUDE PALM OIL REFERENCE PRICE - REUTERS
Indonesia is considering setting its crude palm oil (CPO) export reference price every two weeks instead of monthly, a senior trade ministry offici ...
Friday, 08 July 22
BUNKER PRICES EXPECTED TO RECOVER LOST GROUND NEXT WEEK - SERGEY IVANOV, MABUX
Over the Week 27, the world bunker indices showed a sharp decline, primarily due to the fall in oil prices on July 05. The 380 HSFO index fell by 5 ...
Thursday, 07 July 22
NTPC MINES 61% MORE COAL AT 4.22 MN METRIC TONNES IN APRIL-JUNE: PTI
State-owned power giant NTPC on Tuesday said that its coal output grew by 61 per cent to Rs 42.40 lakh metric tonnes in April-June quarter from 26. ...
Thursday, 07 July 22
COAL INDIA'S PRODUCTION SETS RECORD INCREASE OF 29% YOY AT 36 MT IN Q1FY23 - IIFL SECURITIES
Coal India Limited (CIL) has ended April-June quarter FY’23 capping a historic high of 29% yoy output growth, compared to same quarter FY&rsq ...
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- Tata Chemicals Ltd - India
- Lanco Infratech Ltd - India
- Renaissance Capital - South Africa
- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- ICICI Bank Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- Price Waterhouse Coopers - Russia
- Medco Energi Mining Internasional
- Mercuria Energy - Indonesia
- PTC India Limited - India
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- Economic Council, Georgia
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Energy Exchange, India
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Kumho Petrochemical, South Korea
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- Minerals Council of Australia
- Africa Commodities Group - South Africa
- The University of Queensland
- Energy Link Ltd, New Zealand
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
- Straits Asia Resources Limited - Singapore
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement - Thailand
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Sree Jayajothi Cements Limited - India
- Orica Australia Pty. Ltd.
- Meralco Power Generation, Philippines
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- MS Steel International - UAE
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- Samtan Co., Ltd - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Chettinad Cement Corporation Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Coalindo Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- Wood Mackenzie - Singapore
- Sical Logistics Limited - India
- The State Trading Corporation of India Ltd
- Edison Trading Spa - Italy
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- Borneo Indobara - Indonesia
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- South Luzon Thermal Energy Corporation
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- Ministry of Transport, Egypt
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Ind-Barath Power Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Salva Resources Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Grasim Industreis Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Goldman Sachs - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Indika Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Antam Resourcindo - Indonesia
- Petron Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Bangladesh Power Developement Board
- Karaikal Port Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Eastern Energy - Thailand
- Intertek Mineral Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Mercator Lines Limited - India
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- Aditya Birla Group - India
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Kideco Jaya Agung - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Directorate Of Revenue Intelligence - India
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- Marubeni Corporation - India
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Thiess Contractors Indonesia
- European Bulk Services B.V. - Netherlands
- Pendopo Energi Batubara - Indonesia
- Siam City Cement PLC, Thailand
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- Sindya Power Generating Company Private Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Planning Commission, India
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- VISA Power Limited - India
- The Treasury - Australian Government
- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- Australian Commodity Traders Exchange
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Commonwealth Bank - Australia
- New Zealand Coal & Carbon
- Wilmar Investment Holdings
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- Bhatia International Limited - India
- Cigading International Bulk Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- Agrawal Coal Company - India
- Kalimantan Lumbung Energi - Indonesia
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