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