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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, 11 September 21
RECORD CHINESE COAL FUTURES SIGNAL NEED TO BOOST OUTPUT - REUTERS
China’s coal prices have climbed to a record high, signaling the need for more production in the short term, even as the government tries to ...
Saturday, 11 September 21
IN 2022, EIA EXPECTS U.S. COAL PRODUCTION TO INCREASE BY 47 MMST TO 648 MMST
U.S. Coal production accordng to EIA's forecast, totals 601 million short tons (MMst) in 2021, 66 MMst more than in 2020, EIA's Short-Term ...
Wednesday, 08 September 21
FITCH RATINGS RAISES THERMAL COAL PRICE ASSUMPTIONS ON TIGHT SUPPLY
Fitch Ratings has increased all its Qinhuangdao 5,500kcal/kg price assumptions and short- and medium-term Newcastle 6,000kcal/kg price assumptions ...
Wednesday, 08 September 21
COAL IS STILL KING; INDONESIAN COAL PRICE REFERENCE ABOVE $150 FOR FIRST TIME IN HISTORY
COALspot.com: The Indonesian Coal Price Reference rose dramatically from US$ 127.05 in February 2011, to a peak of US$ 150.03 in September 2021, be ...
Wednesday, 08 September 21
MARKET INSIGHT - INTERMODAL
Last August was extremely hot in the dry bulk market with rates rising at levels that we have years to witness. The dry bulk index exceeded the 4,0 ...
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- Central Java Power - Indonesia
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Goldman Sachs - Singapore
- Manunggal Multi Energi - Indonesia
- Gujarat Sidhee Cement - India
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- Orica Mining Services - Indonesia
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Thai Mozambique Logistica
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- International Coal Ventures Pvt Ltd - India
- Larsen & Toubro Limited - India
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- Price Waterhouse Coopers - Russia
- Miang Besar Coal Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- Intertek Mineral Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Economic Council, Georgia
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- Tamil Nadu electricity Board
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- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Vedanta Resources Plc - India
- Grasim Industreis Ltd - India
- Deloitte Consulting - India
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Billiton Holdings Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Banpu Public Company Limited - Thailand
- Ministry of Mines - Canada
- Therma Luzon, Inc, Philippines
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Karaikal Port Pvt Ltd - India
- Minerals Council of Australia
- Energy Link Ltd, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Mjunction Services Limited - India
- India Bulls Power Limited - India
- Wilmar Investment Holdings
- Vijayanagar Sugar Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- The Treasury - Australian Government
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- Borneo Indobara - Indonesia
- Posco Energy - South Korea
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- European Bulk Services B.V. - Netherlands
- Essar Steel Hazira Ltd - India
- Attock Cement Pakistan Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cement Manufacturers Association - India
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Chettinad Cement Corporation Ltd - India
- Siam City Cement PLC, Thailand
- Global Coal Blending Company Limited - Australia
- Salva Resources Pvt Ltd - India
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
- Maheswari Brothers Coal Limited - India
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- Parliament of New Zealand
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- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- Chamber of Mines of South Africa
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- Sree Jayajothi Cements Limited - India
- Ambuja Cements Ltd - India
- CNBM International Corporation - China
- Videocon Industries ltd - India
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- Aditya Birla Group - India
- London Commodity Brokers - England
- Formosa Plastics Group - Taiwan
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
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- Tata Chemicals Ltd - India
- Indo Tambangraya Megah - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Indonesian Coal Mining Association
- Ministry of Transport, Egypt
- Energy Development Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- LBH Netherlands Bv - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Toyota Tsusho Corporation, Japan
- Africa Commodities Group - South Africa
- Planning Commission, India
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- Siam City Cement - Thailand
- Australian Coal Association
- Riau Bara Harum - Indonesia
- Thiess Contractors Indonesia
- Coalindo Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Orica Australia Pty. Ltd.
- Bukit Baiduri Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Romanian Commodities Exchange
- IHS Mccloskey Coal Group - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Generating Authority of Thailand
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- New Zealand Coal & Carbon
- SMC Global Power, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- Georgia Ports Authority, United States
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Commonwealth Bank - Australia
- Marubeni Corporation - India
- GAC Shipping (India) Pvt Ltd
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- Indika Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Agrawal Coal Company - India
- Anglo American - United Kingdom
- Merrill Lynch Commodities Europe
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- McConnell Dowell - Australia
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
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