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