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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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Sunday, 03 July 22
CHINESE VICE PREMIER STRESSES CLEAN, EFFICIENT USE OF COAL - XINHUA
Chinese Vice Premier Han Zheng has stressed efforts to promote the clean and efficient use of coal, and pursue green, low-carbon and high-quality d ...
Sunday, 03 July 22
SOVEREIGN SECTOR OUTLOOK REVISED TO NEUTRAL ON UKRAINE WAR IMPACT - FITCH RATINGS
The deterioration in global sovereign credit conditions this year relative to our expectations at end-2021 has caused Fitch Ratings to change its g ...
Saturday, 02 July 22
GLOBAL SEABORNE COAL EXPORTS IN 2021 INCREASED BY 4.4% Y-O-Y TO 1147 MLN TONNES - BANCHERO COSTA
In the full 12 months of 2021, global seaborne coal exports increased by +4.4% y-o-y to 1147 mln tonnes, from 1099 mln tonnes in 2020, according to ...
Friday, 01 July 22
INDIA'S TOP CEMENT MAKER PAYING FOR RUSSIAN COAL IN CHINESE YUAN - REUTERS
India’s biggest cement producer, UltraTech Cement ULTC.NS, is importing a cargo of Russian coal and paying using Chinese yuan, according to a ...
Thursday, 30 June 22
FINANCIAL GAINS SUPPORT COAL TRANSITION - BALTIC EXCHANGE
Support for the shift away from coal dependency continues to mount, with the International Monetary Fund (IMF) calculating that the move would gene ...
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- Star Paper Mills Limited - India
- Grasim Industreis Ltd - India
- The Treasury - Australian Government
- ICICI Bank Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining Corp, Philippines
- Australian Coal Association
- Thai Mozambique Logistica
- Barasentosa Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Thiess Contractors Indonesia
- TeaM Sual Corporation - Philippines
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- Agrawal Coal Company - India
- Mercator Lines Limited - India
- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- Xindia Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- CNBM International Corporation - China
- Price Waterhouse Coopers - Russia
- Merrill Lynch Commodities Europe
- Orica Mining Services - Indonesia
- Minerals Council of Australia
- Central Java Power - Indonesia
- Bharathi Cement Corporation - India
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- Eastern Energy - Thailand
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Wood Mackenzie - Singapore
- ASAPP Information Group - India
- Kohat Cement Company Ltd. - Pakistan
- Attock Cement Pakistan Limited
- GMR Energy Limited - India
- Ind-Barath Power Infra Limited - India
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- Holcim Trading Pte Ltd - Singapore
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement PLC, Thailand
- Port Waratah Coal Services - Australia
- Planning Commission, India
- Miang Besar Coal Terminal - Indonesia
- Mjunction Services Limited - India
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Bukit Baiduri Energy - Indonesia
- The University of Queensland
- Kumho Petrochemical, South Korea
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- Electricity Authority, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Makarim & Taira - Indonesia
- New Zealand Coal & Carbon
- VISA Power Limited - India
- Goldman Sachs - Singapore
- Energy Development Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
- Orica Australia Pty. Ltd.
- Binh Thuan Hamico - Vietnam
- Coalindo Energy - Indonesia
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- San Jose City I Power Corp, Philippines
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Borneo Indobara - Indonesia
- MS Steel International - UAE
- Bayan Resources Tbk. - Indonesia
- SMC Global Power, Philippines
- Coastal Gujarat Power Limited - India
- Marubeni Corporation - India
- Savvy Resources Ltd - HongKong
- Dalmia Cement Bharat India
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- Vizag Seaport Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Transport, Egypt
- Mintek Dendrill Indonesia
- Trasteel International SA, Italy
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indogreen Group - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Indian Oil Corporation Limited
- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Wilmar Investment Holdings
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
- Kepco SPC Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- Posco Energy - South Korea
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
- Bahari Cakrawala Sebuku - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Medco Energi Mining Internasional
- Sakthi Sugars Limited - India
- Kapuas Tunggal Persada - Indonesia
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- Anglo American - United Kingdom
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Videocon Industries ltd - India
- Formosa Plastics Group - Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement - Thailand
- CIMB Investment Bank - Malaysia
- Bukit Makmur.PT - Indonesia
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- Bangladesh Power Developement Board
- Jindal Steel & Power Ltd - India
- PowerSource Philippines DevCo
- Karaikal Port Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- PTC India Limited - India
- Carbofer General Trading SA - India
- Jaiprakash Power Ventures ltd
- Electricity Generating Authority of Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Uttam Galva Steels Limited - India
- Meralco Power Generation, Philippines
- Bulk Trading Sa - Switzerland
- IHS Mccloskey Coal Group - USA
- Global Green Power PLC Corporation, Philippines
- Latin American Coal - Colombia
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
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