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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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Thursday, 14 October 21
SPIKING COAL PRICES: DON’T BLAME THE ENERGY TRANSITION - IEEFA
Volatility highlights urgency for renewables-based energy solutions
“Energy crisis.” The phrase evokes nearly-forgotten ...
Thursday, 14 October 21
EIA FORECASTS U.S. COAL PRODUCTION TOTALS 588 MMST IN 2021, UP 53 MMST YOY
U.S. coal production in EIA's forecasts totals 588 million short tons (MMst) in 2021, 53 MMst more than in 2020.
According ...
Wednesday, 13 October 21
COAL PRICES ARE ROARING BACK AMID A GLOBAL ENERGY CRUNCH - SYDNEY MORNING HERALD
Soaring coal prices have placed Australia’s mining and energy exports on track to reach a record $349 billion this year evenas the value of t ...
Wednesday, 13 October 21
CHINA ISN'T THE ONLY HUGE ASIAN ECONOMY WITH A COAL SHORTAGE NOW - CNBC
China is not the only Asian giant grappling with an energy crunch — India is also teetering on the edge of a power crisis.
Mos ...
Wednesday, 13 October 21
MARKET INSIGHT - INTERMODAL
Following up on our insight on May 2021, where we discussed about the Capesize market outlook for the second half of the year, we are pleased to se ...
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- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Indogreen Group - Indonesia
- Kumho Petrochemical, South Korea
- Ind-Barath Power Infra Limited - India
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- Dalmia Cement Bharat India
- Maheswari Brothers Coal Limited - India
- San Jose City I Power Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- Samtan Co., Ltd - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- McConnell Dowell - Australia
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- Global Business Power Corporation, Philippines
- Renaissance Capital - South Africa
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Economic Council, Georgia
- Kohat Cement Company Ltd. - Pakistan
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Makarim & Taira - Indonesia
- Heidelberg Cement - Germany
- Vizag Seaport Private Limited - India
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- Salva Resources Pvt Ltd - India
- Petron Corporation, Philippines
- Port Waratah Coal Services - Australia
- OPG Power Generation Pvt Ltd - India
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- Oldendorff Carriers - Singapore
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- PowerSource Philippines DevCo
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Latin American Coal - Colombia
- Krishnapatnam Port Company Ltd. - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- Eastern Energy - Thailand
- The Treasury - Australian Government
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Directorate Of Revenue Intelligence - India
- Gujarat Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Commonwealth Bank - Australia
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- Posco Energy - South Korea
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- LBH Netherlands Bv - Netherlands
- The State Trading Corporation of India Ltd
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- Australian Commodity Traders Exchange
- Pendopo Energi Batubara - Indonesia
- Intertek Mineral Services - Indonesia
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- Australian Coal Association
- Goldman Sachs - Singapore
- Kepco SPC Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- Edison Trading Spa - Italy
- SMC Global Power, Philippines
- Indo Tambangraya Megah - Indonesia
- Carbofer General Trading SA - India
- Riau Bara Harum - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Global Green Power PLC Corporation, Philippines
- Uttam Galva Steels Limited - India
- Jindal Steel & Power Ltd - India
- Thiess Contractors Indonesia
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Meralco Power Generation, Philippines
- Malabar Cements Ltd - India
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
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- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- Sinarmas Energy and Mining - Indonesia
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- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
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- Star Paper Mills Limited - India
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Grasim Industreis Ltd - India
- Africa Commodities Group - South Africa
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Bukit Makmur.PT - Indonesia
- Bhushan Steel Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- International Coal Ventures Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Barasentosa Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- New Zealand Coal & Carbon
- Planning Commission, India
- Mercator Lines Limited - India
- Parliament of New Zealand
- Bulk Trading Sa - Switzerland
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Chamber of Mines of South Africa
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- Sojitz Corporation - Japan
- Orica Mining Services - Indonesia
- Jaiprakash Power Ventures ltd
- Bayan Resources Tbk. - Indonesia
- MS Steel International - UAE
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Gujarat Sidhee Cement - India
- Lanco Infratech Ltd - India
- Baramulti Group, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Marubeni Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Parry Sugars Refinery, India
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Bukit Asam (Persero) Tbk - Indonesia
- Anglo American - United Kingdom
- GMR Energy Limited - India
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- South Luzon Thermal Energy Corporation
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