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