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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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- Energy Link Ltd, New Zealand
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Bangladesh Power Developement Board
- Vedanta Resources Plc - India
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- Eastern Coal Council - USA
- Mintek Dendrill Indonesia
- SN Aboitiz Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Petron Corporation, Philippines
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
- LBH Netherlands Bv - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Uttam Galva Steels Limited - India
- Meenaskhi Energy Private Limited - India
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- The University of Queensland
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Parliament of New Zealand
- Coal and Oil Company - UAE
- Essar Steel Hazira Ltd - India
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- Kaltim Prima Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Larsen & Toubro Limited - India
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- Wilmar Investment Holdings
- Port Waratah Coal Services - Australia
- Sical Logistics Limited - India
- Ind-Barath Power Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- Aboitiz Power Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kobexindo Tractors - Indoneisa
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- Borneo Indobara - Indonesia
- Price Waterhouse Coopers - Russia
- Vizag Seaport Private Limited - India
- Bulk Trading Sa - Switzerland
- Riau Bara Harum - Indonesia
- Formosa Plastics Group - Taiwan
- Romanian Commodities Exchange
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Indika Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- Gujarat Sidhee Cement - India
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- Latin American Coal - Colombia
- Tata Chemicals Ltd - India
- Indian Energy Exchange, India
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- European Bulk Services B.V. - Netherlands
- Pendopo Energi Batubara - Indonesia
- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- Baramulti Group, Indonesia
- Altura Mining Limited, Indonesia
- Global Coal Blending Company Limited - Australia
- Standard Chartered Bank - UAE
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Kumho Petrochemical, South Korea
- South Luzon Thermal Energy Corporation
- ASAPP Information Group - India
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- Singapore Mercantile Exchange
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- Malabar Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Commonwealth Bank - Australia
- Alfred C Toepfer International GmbH - Germany
- Economic Council, Georgia
- Global Green Power PLC Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Bayan Resources Tbk. - Indonesia
- TeaM Sual Corporation - Philippines
- Planning Commission, India
- Straits Asia Resources Limited - Singapore
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Ministry of Finance - Indonesia
- Attock Cement Pakistan Limited
- Maheswari Brothers Coal Limited - India
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kalimantan Lumbung Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Madhucon Powers Ltd - India
- GAC Shipping (India) Pvt Ltd
- ICICI Bank Limited - India
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Sree Jayajothi Cements Limited - India
- Central Electricity Authority - India
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Aditya Birla Group - India
- Coastal Gujarat Power Limited - India
- Sindya Power Generating Company Private Ltd
- Bhatia International Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- Independent Power Producers Association of India
- Orica Mining Services - Indonesia
- Ministry of Mines - Canada
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- PTC India Limited - India
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Electricity Authority, New Zealand
- Mjunction Services Limited - India
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Sarangani Energy Corporation, Philippines
- PowerSource Philippines DevCo
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
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