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