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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, 20 January 22
CHINESE COAL JUMPS OVER 6% ON PRE-HOLIDAY SUPPLY WORRY - REUTERS
China’s thermal coal futures soared more than 6% on Wednesday, hitting a level last seen in late November as investors grew concerned over ti ...
Thursday, 20 January 22
VIETNAM: COAL SECTOR SEES POSITIVE PROSPECT IN 2022 - VNA
With many signs of rising demand for coal in various economic sectors in 2022, the Vietnam National Coal – Mineral Industries Group (Vinacomi ...
Wednesday, 19 January 22
MARKET INSIGHT - INTERMODAL
Since the beginning of the year, we have been witnessing the BDI correcting downwards with sizable drops across all segments. Latest similar levels ...
Sunday, 09 January 22
INDONESIA MINISTER SAYS 'EMERGENCY OVER' ON COAL SUPPLY CRUNCH - REUTERS
Indonesia’s power emergency which has triggered a coal export ban is over but the government will still continue to discuss policies in this ...
Wednesday, 05 January 22
CHINA COAL FUTURES SURGE ON SUPPLY WORRIES AMID INDONESIA EXPORT BAN - REUTERS
China’s thermal coal futures surged by as much as 7.8per cent to kick off 2022 on concerns of supply disruptions after Indonesia, its biggest ...
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- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Indo Tambangraya Megah - Indonesia
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Ceylon Electricity Board - Sri Lanka
- Grasim Industreis Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Alfred C Toepfer International GmbH - Germany
- Economic Council, Georgia
- Altura Mining Limited, Indonesia
- India Bulls Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Meralco Power Generation, Philippines
- ASAPP Information Group - India
- London Commodity Brokers - England
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- Coalindo Energy - Indonesia
- Kumho Petrochemical, South Korea
- Romanian Commodities Exchange
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Ambuja Cements Ltd - India
- Port Waratah Coal Services - Australia
- Australian Commodity Traders Exchange
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Parry Sugars Refinery, India
- OPG Power Generation Pvt Ltd - India
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- Karaikal Port Pvt Ltd - India
- Electricity Authority, New Zealand
- Goldman Sachs - Singapore
- Global Business Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Indika Energy - Indonesia
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- Minerals Council of Australia
- IHS Mccloskey Coal Group - USA
- Asmin Koalindo Tuhup - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- Meenaskhi Energy Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Kobexindo Tractors - Indoneisa
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Semirara Mining Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Australian Coal Association
- GVK Power & Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Xindia Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
- PTC India Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Independent Power Producers Association of India
- PetroVietnam Power Coal Import and Supply Company
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Maheswari Brothers Coal Limited - India
- Timah Investasi Mineral - Indoneisa
- Videocon Industries ltd - India
- Mintek Dendrill Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Dalmia Cement Bharat India
- South Luzon Thermal Energy Corporation
- Essar Steel Hazira Ltd - India
- Sarangani Energy Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- IEA Clean Coal Centre - UK
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- SMG Consultants - Indonesia
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- Heidelberg Cement - Germany
- Wood Mackenzie - Singapore
- The University of Queensland
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- Antam Resourcindo - Indonesia
- Aditya Birla Group - India
- Semirara Mining and Power Corporation, Philippines
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- Kartika Selabumi Mining - Indonesia
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- Planning Commission, India
- White Energy Company Limited
- Carbofer General Trading SA - India
- Georgia Ports Authority, United States
- Parliament of New Zealand
- Kaltim Prima Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- SMC Global Power, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Tamil Nadu electricity Board
- Energy Link Ltd, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Rio Tinto Coal - Australia
- Bayan Resources Tbk. - Indonesia
- Bhushan Steel Limited - India
- Trasteel International SA, Italy
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Chettinad Cement Corporation Ltd - India
- International Coal Ventures Pvt Ltd - India
- Tata Chemicals Ltd - India
- Bulk Trading Sa - Switzerland
- Mjunction Services Limited - India
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Metalloyd Limited - United Kingdom
- Latin American Coal - Colombia
- Merrill Lynch Commodities Europe
- Indogreen Group - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Neyveli Lignite Corporation Ltd, - India
- Anglo American - United Kingdom
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- Barasentosa Lestari - Indonesia
- Vizag Seaport Private Limited - India
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