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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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Monday, 25 October 21
CHINA VOWS TO SEVERELY PUNISH MARKET VIOLATIONS AMID LOW COAL FUTURES PRICES - GLOBAL TIMES
Domestic coal futures had plunged for three consecutive trading days after the government vowed to crack down on soaring prices, and China’s ...
Monday, 25 October 21
FARMERS MAY JOIN THE COAL COMMODITY MARKET TO REDUCE RISKS - GLOBAL TIMES
A recent trip to by the Global Times to East China’s Shandong Province to get a glimpse of China’s coal supply chain revealed a surpris ...
Monday, 25 October 21
CHINA COAL PRICES MARK WORST WEEK SINCE MAY ON GOVERNMENT INTERVENTION - REUTERS
China’s thermal coal futures plunged on Friday and turned in their worst week in five months, following Beijing’s strongest interventio ...
Friday, 22 October 21
THE BIG PICTURE: ENERGY MARKETS - BREAK WAVE ADVISORS
The shipping markets have been pulled further into wild markets of coal and other energy sources. Given how nebulous this sector is, it’s alw ...
Friday, 22 October 21
CHINA WANTS TO COOL COAL PRICES. SIMILAR MOVES FOR METALS, CRUDE FAILED - REUTERS
China’s latest attempt to lower runaway commodity prices, this time for thermal coal, is likely to follow a familiar pattern of initial succe ...
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- Thiess Contractors Indonesia
- Borneo Indobara - Indonesia
- Barasentosa Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Altura Mining Limited, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Ministry of Transport, Egypt
- Africa Commodities Group - South Africa
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ASAPP Information Group - India
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Mercator Lines Limited - India
- Riau Bara Harum - Indonesia
- Siam City Cement - Thailand
- Videocon Industries ltd - India
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Planning Commission, India
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- Central Java Power - Indonesia
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- Mintek Dendrill Indonesia
- Parliament of New Zealand
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining Corp, Philippines
- Bhushan Steel Limited - India
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- India Bulls Power Limited - India
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Bukit Asam (Persero) Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- Georgia Ports Authority, United States
- Simpson Spence & Young - Indonesia
- Sical Logistics Limited - India
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- GMR Energy Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Commonwealth Bank - Australia
- PTC India Limited - India
- Indian Energy Exchange, India
- Gujarat Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- Bangladesh Power Developement Board
- Attock Cement Pakistan Limited
- Heidelberg Cement - Germany
- Kobexindo Tractors - Indoneisa
- Banpu Public Company Limited - Thailand
- Ceylon Electricity Board - Sri Lanka
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
- Kideco Jaya Agung - Indonesia
- Directorate Of Revenue Intelligence - India
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Wood Mackenzie - Singapore
- Petron Corporation, Philippines
- CIMB Investment Bank - Malaysia
- TNB Fuel Sdn Bhd - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- Meralco Power Generation, Philippines
- Makarim & Taira - Indonesia
- Edison Trading Spa - Italy
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- Wilmar Investment Holdings
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- TeaM Sual Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- Kartika Selabumi Mining - Indonesia
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- Central Electricity Authority - India
- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- The Treasury - Australian Government
- Bukit Makmur.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Eastern Energy - Thailand
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
- Indian Oil Corporation Limited
- Essar Steel Hazira Ltd - India
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- New Zealand Coal & Carbon
- Iligan Light & Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Energy Development Corp, Philippines
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Bharathi Cement Corporation - India
- Bukit Baiduri Energy - Indonesia
- The University of Queensland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aboitiz Power Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- South Luzon Thermal Energy Corporation
- Electricity Generating Authority of Thailand
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- Xindia Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Kapuas Tunggal Persada - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Rashtriya Ispat Nigam Limited - India
- SMC Global Power, Philippines
- Bulk Trading Sa - Switzerland
- Karbindo Abesyapradhi - Indoneisa
- Mercuria Energy - Indonesia
- Deloitte Consulting - India
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- Global Green Power PLC Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- Dalmia Cement Bharat India
- Therma Luzon, Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Chettinad Cement Corporation Ltd - India
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Carbofer General Trading SA - India
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- Mjunction Services Limited - India
- Australian Coal Association
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Ministry of Mines - Canada
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