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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, 03 November 21
CHINA TO LAUNCH NEW DATA MONITORING SYSTEM, TARGETING COAL MARKET SPECULATION, HOARDING - GLOBAL TIMES
China’s top economic planner announced on Sunday a new data system for supervising the implementation of medium- and long-term contracts of c ...
Wednesday, 03 November 21
CHINA’S STATE PLANNER SAYS COAL SUPPLY IMPROVING, PRICES STABILISING - REUTERS
China’s coal supply situation has seen significant improvement with joint efforts from coal producers, logistics and downstream users, while ...
Wednesday, 03 November 21
HIGHER COKING COAL PRICES TO PARE PROFITABILITY OF STEELMAKERS IN SECOND HALF OF FY22 - CRISIL RATINGS
The operating margin of primary steelmakers will reduce by a third to 24-26% in the second half of this fiscal versus the first half as input cost ...
Wednesday, 03 November 21
MARKET INSIGHT - INTERMODAL
November is here and soon the all time seasonal favorite “all I want or Christmas is you” by Mariah Carey will be played in radio stati ...
Monday, 01 November 21
COAL PRICES HAVE FURTHER ROOM TO DROP: TOP ECONOMIC PLANNER - GLOBAL TIMES
China’s top economic planner said coal prices have further room to drop on Friday, as the most traded coal futures dropped to below 1,000 yua ...
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- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- Manunggal Multi Energi - Indonesia
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Africa Commodities Group - South Africa
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- Bayan Resources Tbk. - Indonesia
- CIMB Investment Bank - Malaysia
- Global Coal Blending Company Limited - Australia
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- Standard Chartered Bank - UAE
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- Sree Jayajothi Cements Limited - India
- OPG Power Generation Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Maheswari Brothers Coal Limited - India
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Straits Asia Resources Limited - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coal and Oil Company - UAE
- Economic Council, Georgia
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- Gujarat Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Singapore Mercantile Exchange
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- Bhoruka Overseas - Indonesia
- ASAPP Information Group - India
- Ceylon Electricity Board - Sri Lanka
- Georgia Ports Authority, United States
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- Wilmar Investment Holdings
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Vedanta Resources Plc - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- Energy Development Corp, Philippines
- PowerSource Philippines DevCo
- Siam City Cement PLC, Thailand
- Interocean Group of Companies - India
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- SN Aboitiz Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Chettinad Cement Corporation Ltd - India
- Indogreen Group - Indonesia
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Commonwealth Bank - Australia
- Indo Tambangraya Megah - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Minerals Council of Australia
- India Bulls Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- Central Java Power - Indonesia
- Posco Energy - South Korea
- IEA Clean Coal Centre - UK
- GAC Shipping (India) Pvt Ltd
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- Planning Commission, India
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- Aditya Birla Group - India
- Ambuja Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- Sical Logistics Limited - India
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- International Coal Ventures Pvt Ltd - India
- Makarim & Taira - Indonesia
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- Ministry of Finance - Indonesia
- Kartika Selabumi Mining - Indonesia
- Rio Tinto Coal - Australia
- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- Essar Steel Hazira Ltd - India
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- Toyota Tsusho Corporation, Japan
- London Commodity Brokers - England
- Baramulti Group, Indonesia
- Therma Luzon, Inc, Philippines
- Ministry of Mines - Canada
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Carbofer General Trading SA - India
- Parry Sugars Refinery, India
- Ind-Barath Power Infra Limited - India
- Heidelberg Cement - Germany
- Electricity Authority, New Zealand
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Australian Commodity Traders Exchange
- Indika Energy - Indonesia
- Anglo American - United Kingdom
- Aboitiz Power Corporation - Philippines
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- Xindia Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- SMC Global Power, Philippines
- The University of Queensland
- Salva Resources Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- Savvy Resources Ltd - HongKong
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Medco Energi Mining Internasional
- Independent Power Producers Association of India
- Billiton Holdings Pty Ltd - Australia
- Eastern Coal Council - USA
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
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