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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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Thursday, 30 June 22
WHY ARE LNG SHIPPING STOCKS RESILIENT? - DREWRY
LNG shipping stocks are proving resilient despite uncertainties about growth in global GDP, high inflation and the ongoing geopolitical crisis caus ...
Thursday, 30 June 22
SPOT AUSTRALIAN THERMAL COAL HAS SURGED, BUT CONTRACT PRICE IS KEY - REUTERS
The spot price of Australian thermal coal is higher than that of coking coal, an unprecedented situation that highlights just how the global market ...
Thursday, 30 June 22
SHANXI PROVINCE RAISES ANNUAL COAL OUTPUT TO 1.3 BILLION TONS TO ENSURE CHINA’S ENERGY SUPPLY - GLOBAL TIMES
North China’s Shanxi Province, a major coal-producing region, recently announced a move to increase its annual coal production output by 107 ...
Thursday, 30 June 22
DIVERGENCE BETWEEN HIGH- AND LOW-GRADE THERMAL COAL PRICES IN APAC TO NARROW - FITCH RATINGS
Prices between high- and low-grade thermal coal in Asia-Pacific (APAC) have diverged since late March 2022, but Fitch Ratings expects the gap to na ...
Thursday, 30 June 22
INVESTMENT IN GLOBAL COAL SUPPLY CHAIN TO HIT $115 BN IN 2022, LED BY CHINA AND INDIA - BUSINESS LINE
At over $80 billion, China and India are anticipated to make up the bulk of global coal investment in 2022, says IEA.
The investment ...
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- Kartika Selabumi Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
- Posco Energy - South Korea
- Economic Council, Georgia
- Goldman Sachs - Singapore
- Eastern Coal Council - USA
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- Romanian Commodities Exchange
- Baramulti Group, Indonesia
- Savvy Resources Ltd - HongKong
- Antam Resourcindo - Indonesia
- TeaM Sual Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Sree Jayajothi Cements Limited - India
- Binh Thuan Hamico - Vietnam
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Ministry of Finance - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Heidelberg Cement - Germany
- Madhucon Powers Ltd - India
- Indika Energy - Indonesia
- IEA Clean Coal Centre - UK
- Gujarat Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Uttam Galva Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- Tamil Nadu electricity Board
- Meralco Power Generation, Philippines
- Parry Sugars Refinery, India
- Gujarat Sidhee Cement - India
- Mercuria Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Latin American Coal - Colombia
- CNBM International Corporation - China
- Petrochimia International Co. Ltd.- Taiwan
- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Kideco Jaya Agung - Indonesia
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- Star Paper Mills Limited - India
- Straits Asia Resources Limited - Singapore
- Holcim Trading Pte Ltd - Singapore
- The State Trading Corporation of India Ltd
- Independent Power Producers Association of India
- Thai Mozambique Logistica
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- Planning Commission, India
- Indogreen Group - Indonesia
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- PowerSource Philippines DevCo
- Kepco SPC Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- Electricity Generating Authority of Thailand
- Australian Coal Association
- Aditya Birla Group - India
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Grasim Industreis Ltd - India
- Samtan Co., Ltd - South Korea
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- Power Finance Corporation Ltd., India
- Merrill Lynch Commodities Europe
- Australian Commodity Traders Exchange
- Directorate Of Revenue Intelligence - India
- Kobexindo Tractors - Indoneisa
- Parliament of New Zealand
- Marubeni Corporation - India
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- The University of Queensland
- Jaiprakash Power Ventures ltd
- PTC India Limited - India
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- SMG Consultants - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Deloitte Consulting - India
- McConnell Dowell - Australia
- Bhoruka Overseas - Indonesia
- Barasentosa Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Altura Mining Limited, Indonesia
- ICICI Bank Limited - India
- Bharathi Cement Corporation - India
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- Xindia Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- Attock Cement Pakistan Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ambuja Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Kohat Cement Company Ltd. - Pakistan
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Carbofer General Trading SA - India
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- Coal and Oil Company - UAE
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Price Waterhouse Coopers - Russia
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- San Jose City I Power Corp, Philippines
- MS Steel International - UAE
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Meenaskhi Energy Private Limited - India
- Bukit Makmur.PT - Indonesia
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Kalimantan Lumbung Energi - Indonesia
- Minerals Council of Australia
- Sinarmas Energy and Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- The Treasury - Australian Government
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
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