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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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Saturday, 16 October 21
COAL IS 'KING' AS GAS PRICES SOAR, TOTAL CEO SAYS - AND IT’S BACKFIRING ON CLEANER ENERGY GOALS - CNBC
Surging natural gas prices have led to a jump in coal use, with plants in Europe and Asia firing back up as temperatures decline and the world grap ...
Saturday, 16 October 21
VIETNAM'S COAL-FIRED POWER MAY DOUBLE BY 2030 UNDER DRAFT ENERGY PLAN - REUTERS
Vietnam may double the amount of coal-fired electric generation it installs by 2030 under a draft power development plan submitted to the prime min ...
Friday, 15 October 21
AUSTRALIA'S WHITEHAVEN EXPECTS TO BE DEBT-FREE NEXT YEAR AS COAL PRICES SOAR - REUTERS
Australia’s Whitehaven Coal WHC.AX said on Thursday it expects to be debt-free by early 2022, as thermal coal prices surge to record highs on ...
Friday, 15 October 21
WINTER CHILL KEEPS CHINA'S COAL PRICES HIGH, POWER CRUNCH STOKES INFLATION - REUTERS
China coal prices held near record highs on Thursday as cold weather swept into the country’s north and power plants stocked up on the fuel t ...
Friday, 15 October 21
GLOBAL STEEL DEMAND GROWTH DOWNGRADED FOR 2021 DUE TO CHINA - WORLD STEEL ASSOCIATION
The World Steel Association (worldsteel) today released an update of its Short Range Outlook (SRO) for 2021 and 2022. worldsteel forecasts that ste ...
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- McConnell Dowell - Australia
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Savvy Resources Ltd - HongKong
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining Corp, Philippines
- Interocean Group of Companies - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Lanco Infratech Ltd - India
- Ministry of Finance - Indonesia
- Baramulti Group, Indonesia
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Eastern Coal Council - USA
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- Price Waterhouse Coopers - Russia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Romanian Commodities Exchange
- Trasteel International SA, Italy
- Ceylon Electricity Board - Sri Lanka
- San Jose City I Power Corp, Philippines
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Independent Power Producers Association of India
- Chettinad Cement Corporation Ltd - India
- Indian Oil Corporation Limited
- London Commodity Brokers - England
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Meenaskhi Energy Private Limited - India
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- Economic Council, Georgia
- PNOC Exploration Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Meralco Power Generation, Philippines
- Metalloyd Limited - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- SMC Global Power, Philippines
- Manunggal Multi Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Australian Coal Association
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- Star Paper Mills Limited - India
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- Salva Resources Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement PLC, Thailand
- GMR Energy Limited - India
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- Globalindo Alam Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- Georgia Ports Authority, United States
- Simpson Spence & Young - Indonesia
- New Zealand Coal & Carbon
- Billiton Holdings Pty Ltd - Australia
- Bharathi Cement Corporation - India
- South Luzon Thermal Energy Corporation
- Coalindo Energy - Indonesia
- Minerals Council of Australia
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- Parry Sugars Refinery, India
- Kideco Jaya Agung - Indonesia
- Barasentosa Lestari - Indonesia
- Indonesian Coal Mining Association
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Deloitte Consulting - India
- Australian Commodity Traders Exchange
- LBH Netherlands Bv - Netherlands
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Posco Energy - South Korea
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- Sree Jayajothi Cements Limited - India
- Central Java Power - Indonesia
- Tata Chemicals Ltd - India
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Vizag Seaport Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- Bulk Trading Sa - Switzerland
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- European Bulk Services B.V. - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Chamber of Mines of South Africa
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Edison Trading Spa - Italy
- Petron Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Directorate General of MIneral and Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- White Energy Company Limited
- Planning Commission, India
- Larsen & Toubro Limited - India
- Timah Investasi Mineral - Indoneisa
- IHS Mccloskey Coal Group - USA
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- Mercuria Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- Borneo Indobara - Indonesia
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- ASAPP Information Group - India
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Iligan Light & Power Inc, Philippines
- Sakthi Sugars Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Baiduri Energy - Indonesia
- Agrawal Coal Company - India
- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- The University of Queensland
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Standard Chartered Bank - UAE
- Latin American Coal - Colombia
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- International Coal Ventures Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Orica Mining Services - Indonesia
- Africa Commodities Group - South Africa
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- Kumho Petrochemical, South Korea
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- Altura Mining Limited, Indonesia
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
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