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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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Wednesday, 24 November 21
PRICE OF CHINA’S COAL FUTURE DROPS BY 60% AS NATIONWIDE DAILY OUTPUT REACHES OVER 12 MILLION TONS: NDRC - GLOBAL TIMES
China’s daily coal output has now stabilized after reaching over 12 million tons and the price of coal futures has declined to 800 yuan ($125 ...
Friday, 19 November 21
CHINA: COAL SUPPLIES TO STABILIZE FOR COMING COLD SEASON
China is capable of ensuring stable coal supplies this winter and next spring with the increase in coal production and the rising stockpiles at pow ...
Wednesday, 17 November 21
MARKET INSIGHT - INTERMODAL
It has been another declining week for the dry bulk market and evidently, we are seeing asset values gradually losing momentum as well. Following a ...
Tuesday, 16 November 21
EARNINGS RECOVERY IN INDONESIAN COAL TO CONTINUE THROUGH 2021, BUT SLOW IN 2022 - FITCH RATINGS
The recovery in the operating and financial performance of Indonesian coal miners and coal contractors is likely to slow in 2022, but coal prices s ...
Tuesday, 16 November 21
INDONESIA’S 2022 COAL USE FOR POWER GENERATION SET TO RISE 3% - REUTERS
Indonesia’s coal consumption for power generation is likely to rise by 3.1% next year compared to 2021, the head of the country’s state ...
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- SMC Global Power, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GVK Power & Infra Limited - India
- Bhatia International Limited - India
- Orica Mining Services - Indonesia
- Siam City Cement - Thailand
- Ministry of Mines - Canada
- Iligan Light & Power Inc, Philippines
- Cement Manufacturers Association - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- VISA Power Limited - India
- London Commodity Brokers - England
- Orica Australia Pty. Ltd.
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Mjunction Services Limited - India
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- SMG Consultants - Indonesia
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- San Jose City I Power Corp, Philippines
- Oldendorff Carriers - Singapore
- Indo Tambangraya Megah - Indonesia
- TeaM Sual Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Ambuja Cements Ltd - India
- Bhushan Steel Limited - India
- Uttam Galva Steels Limited - India
- Indian Oil Corporation Limited
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
- Kumho Petrochemical, South Korea
- Coalindo Energy - Indonesia
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Sinarmas Energy and Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Borneo Indobara - Indonesia
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- McConnell Dowell - Australia
- Sarangani Energy Corporation, Philippines
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- Sical Logistics Limited - India
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- Trasteel International SA, Italy
- SN Aboitiz Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Posco Energy - South Korea
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Formosa Plastics Group - Taiwan
- Bhoruka Overseas - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Mercator Lines Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Coastal Gujarat Power Limited - India
- GMR Energy Limited - India
- Tata Chemicals Ltd - India
- Georgia Ports Authority, United States
- Australian Commodity Traders Exchange
- Indian Energy Exchange, India
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- IHS Mccloskey Coal Group - USA
- Bukit Makmur.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Merrill Lynch Commodities Europe
- Toyota Tsusho Corporation, Japan
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- Madhucon Powers Ltd - India
- Vedanta Resources Plc - India
- Thiess Contractors Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Sojitz Corporation - Japan
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- Grasim Industreis Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Latin American Coal - Colombia
- Wilmar Investment Holdings
- Baramulti Group, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- Edison Trading Spa - Italy
- Economic Council, Georgia
- Semirara Mining Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- Dalmia Cement Bharat India
- Parliament of New Zealand
- Chettinad Cement Corporation Ltd - India
- Bayan Resources Tbk. - Indonesia
- Holcim Trading Pte Ltd - Singapore
- International Coal Ventures Pvt Ltd - India
- Energy Development Corp, Philippines
- Coal and Oil Company - UAE
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Minerals Council of Australia
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- PNOC Exploration Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Wood Mackenzie - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- White Energy Company Limited
- Africa Commodities Group - South Africa
- India Bulls Power Limited - India
- The University of Queensland
- Commonwealth Bank - Australia
- Makarim & Taira - Indonesia
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- Therma Luzon, Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- Ceylon Electricity Board - Sri Lanka
- Interocean Group of Companies - India
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- MS Steel International - UAE
- Attock Cement Pakistan Limited
- Gujarat Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- CIMB Investment Bank - Malaysia
- Banpu Public Company Limited - Thailand
- Petron Corporation, Philippines
- Siam City Cement PLC, Thailand
- Kapuas Tunggal Persada - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
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