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