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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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Wednesday, 22 September 21
MARKET INSIGHT - INTERMODAL
The unfolding last week of a trilateral defence pact between the United States, Australia, the United Kingdom (AUKUS) envisages a wide range of col ...
Tuesday, 21 September 21
CHINESE COAL IMPORTS FROM AUSTRALIA DROP 98.6% AS RESTRICTIONS BITE - BIMCO
In the first seven months of the year Chinese coal imports from Australia have totalled just 780,000 tonnes as Chinese restrictions on Australian c ...
Tuesday, 21 September 21
CHINA'S COAL OUTPUT RESUMES GROWTH IN AUGUST - XINHUA
China’s raw coal output rose 0.8 percent year on year to 340 million tonnes last month, official data showed.
The growth rate ...
Wednesday, 15 September 21
MARKET INSIGHT - INTERMODAL
Following the oil price sell off during most of August, partly triggered by oil demand fears amid the delta COVID variant, oil prices have resumed ...
Saturday, 11 September 21
CIL STEPS UP SUPPLY COAL TO POWER SECTOR; PER-DAY AVERAGE 20 PC HIGHER THAN LAST YEAR - PTI
State-owned CIL on Friday said it has stepped up the supply of coal to the power sector in the first eight days of the current month, with an avera ...
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- GN Power Mariveles Coal Plant, Philippines
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- Mercator Lines Limited - India
- Vedanta Resources Plc - India
- IEA Clean Coal Centre - UK
- Thai Mozambique Logistica
- Ministry of Mines - Canada
- Heidelberg Cement - Germany
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Posco Energy - South Korea
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- Eastern Energy - Thailand
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Salva Resources Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- McConnell Dowell - Australia
- Tamil Nadu electricity Board
- The University of Queensland
- Australian Coal Association
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Lanco Infratech Ltd - India
- Simpson Spence & Young - Indonesia
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- Georgia Ports Authority, United States
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- Anglo American - United Kingdom
- Sojitz Corporation - Japan
- ASAPP Information Group - India
- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
- Ministry of Transport, Egypt
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- AsiaOL BioFuels Corp., Philippines
- India Bulls Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- Commonwealth Bank - Australia
- Bangladesh Power Developement Board
- Petrochimia International Co. Ltd.- Taiwan
- Directorate Of Revenue Intelligence - India
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- LBH Netherlands Bv - Netherlands
- Mjunction Services Limited - India
- London Commodity Brokers - England
- Energy Development Corp, Philippines
- Ambuja Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Meenaskhi Energy Private Limited - India
- Ministry of Finance - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Iligan Light & Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Sindya Power Generating Company Private Ltd
- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Sakthi Sugars Limited - India
- Central Java Power - Indonesia
- Indika Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Merrill Lynch Commodities Europe
- Kumho Petrochemical, South Korea
- Jaiprakash Power Ventures ltd
- Ceylon Electricity Board - Sri Lanka
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Meralco Power Generation, Philippines
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- Dalmia Cement Bharat India
- Malabar Cements Ltd - India
- Tata Chemicals Ltd - India
- Mercuria Energy - Indonesia
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- Borneo Indobara - Indonesia
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- Indian Energy Exchange, India
- Rio Tinto Coal - Australia
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Kobexindo Tractors - Indoneisa
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Bhoruka Overseas - Indonesia
- Ind-Barath Power Infra Limited - India
- Planning Commission, India
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- Bulk Trading Sa - Switzerland
- PetroVietnam Power Coal Import and Supply Company
- Aboitiz Power Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- Neyveli Lignite Corporation Ltd, - India
- Carbofer General Trading SA - India
- Standard Chartered Bank - UAE
- Deloitte Consulting - India
- Miang Besar Coal Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Bhatia International Limited - India
- Petron Corporation, Philippines
- Wilmar Investment Holdings
- Manunggal Multi Energi - Indonesia
- VISA Power Limited - India
- Orica Mining Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Xindia Steels Limited - India
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- Pendopo Energi Batubara - Indonesia
- Savvy Resources Ltd - HongKong
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Bayan Resources Tbk. - Indonesia
- Kepco SPC Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GVK Power & Infra Limited - India
- Antam Resourcindo - Indonesia
- Madhucon Powers Ltd - India
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- SN Aboitiz Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Mintek Dendrill Indonesia
- Latin American Coal - Colombia
- Cement Manufacturers Association - India
- Marubeni Corporation - India
- Semirara Mining Corp, Philippines
- Eastern Coal Council - USA
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- CNBM International Corporation - China
- IHS Mccloskey Coal Group - USA
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Economic Council, Georgia
- Binh Thuan Hamico - Vietnam
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PTC India Limited - India
- Renaissance Capital - South Africa
- Chettinad Cement Corporation Ltd - India
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- Bhushan Steel Limited - India
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