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