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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, 09 October 21
CHINA POWER CUTS: COAL MINERS ORDERED TO BOOST OUTPUT, SAY REPORTS - BBC
Beijing has reportedly ordered China’s coal mines to boost output as an energy shortage across the country has seen millions of homes and bus ...
Friday, 08 October 21
SEPTEMBER CRUDE OIL TANKER DEMOLISHING HITS 39-MONTHS HIGH AT 1.9M DWT - PETER SAND
Has the lid finally come off for crude oil tanker demolition in 2021? If judged by the 1.9m DWT of capacity that was removed in September, the answ ...
Friday, 08 October 21
COAL SHORTAGE MAY LEAD TO RISE IN STEEL PRICES IN COMING MONTHS: JSPL MD - PTI
Steel prices are expected to increase in the coming months as companies are buying coal at three times the rates a month ago, said a top industry e ...
Wednesday, 06 October 21
INDONESIA COAL PRICE REFERENCE: ANOTHER MONTH, ANOTHER RALLY
COALspot.com: Indonesian Coal Price Reference in a steep climb for most of second and third quarters of 2021 as it reached a pinnacle of $161.63 Oc ...
Wednesday, 06 October 21
EUROPEAN COAL FUTURES CLIMB TO 13-YEAR PEAK - REUTERS
European coal futures rose to a 13-year high and physical thermal coal prices were at record highs as rallying gas prices and strong Asian demand f ...
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- Electricity Generating Authority of Thailand
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- Samtan Co., Ltd - South Korea
- Global Green Power PLC Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- VISA Power Limited - India
- CIMB Investment Bank - Malaysia
- Lanco Infratech Ltd - India
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Ministry of Mines - Canada
- Straits Asia Resources Limited - Singapore
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Merrill Lynch Commodities Europe
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- TeaM Sual Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Gujarat Mineral Development Corp Ltd - India
- Mjunction Services Limited - India
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Aboitiz Power Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- Electricity Authority, New Zealand
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- Eastern Coal Council - USA
- Maheswari Brothers Coal Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Bhoruka Overseas - Indonesia
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- Aditya Birla Group - India
- GVK Power & Infra Limited - India
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Holcim Trading Pte Ltd - Singapore
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- Semirara Mining Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
- Wilmar Investment Holdings
- Vizag Seaport Private Limited - India
- Coal and Oil Company - UAE
- Kaltim Prima Coal - Indonesia
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- Bayan Resources Tbk. - Indonesia
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- Tata Chemicals Ltd - India
- Planning Commission, India
- Bulk Trading Sa - Switzerland
- White Energy Company Limited
- Grasim Industreis Ltd - India
- Marubeni Corporation - India
- Attock Cement Pakistan Limited
- Gujarat Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Baramulti Group, Indonesia
- Bukit Baiduri Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- Oldendorff Carriers - Singapore
- Anglo American - United Kingdom
- Antam Resourcindo - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- Indian Energy Exchange, India
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Manunggal Multi Energi - Indonesia
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
- Sinarmas Energy and Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- Australian Commodity Traders Exchange
- Indika Energy - Indonesia
- SMC Global Power, Philippines
- Madhucon Powers Ltd - India
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Medco Energi Mining Internasional
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Kartika Selabumi Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- Mercator Lines Limited - India
- Thiess Contractors Indonesia
- Carbofer General Trading SA - India
- Banpu Public Company Limited - Thailand
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- Intertek Mineral Services - Indonesia
- Sakthi Sugars Limited - India
- Gujarat Sidhee Cement - India
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- PTC India Limited - India
- Eastern Energy - Thailand
- Coalindo Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- Kumho Petrochemical, South Korea
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- Tamil Nadu electricity Board
- Riau Bara Harum - Indonesia
- Metalloyd Limited - United Kingdom
- IHS Mccloskey Coal Group - USA
- Salva Resources Pvt Ltd - India
- PowerSource Philippines DevCo
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Central Electricity Authority - India
- Kideco Jaya Agung - Indonesia
- Larsen & Toubro Limited - India
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- The Treasury - Australian Government
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- IEA Clean Coal Centre - UK
- ICICI Bank Limited - India
- Economic Council, Georgia
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Posco Energy - South Korea
- Billiton Holdings Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
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