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