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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, 01 September 21
KOMIPO TO BUY 1.56 MILLION TONS OF 5600 NAR COAL OF AUSTRALIA OR SOUTH AFRICAN ORIGIN FOR 2022 - 2024
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) has issued an international tender for total 1,560,000 MT of Bituminous Coal to be used a ...
Wednesday, 01 September 21
MARKET INSIGHT - INTERMODAL
As the summer season is coming to an end, the dry bulk market continues to rally. The confidence that the outstanding freight market performance ha ...
Monday, 30 August 21
68% OF U.S. COAL FLEET RETIREMENTS SINCE 2011 WERE PLANTS FUELED BY BITUMINOUS COAL - EIA
In 2011, the United States had 317.6 gigawatts (GW) of coal-fired electric generation capacity. About 88.7 GW of that capacity was retired in the d ...
Friday, 27 August 21
ALL YOU NEED TO KNOW ABOUT COAL'S MASSIVE RALLY AND NEAR-TERM OUTLOOK - CNBCTV18
Australia’s thermal coal at Newcastle Port, the benchmark for the vast Asian market, has surged over 100 percent this year to trade above $16 ...
Friday, 27 August 21
THE ECONOMICS OF INDONESIA’S DIESEL POWER PLANT TO GAS CONVERSION PLAN ARE PROBLEMATIC - IEEFA
Deploying new small-scale LNG is an uphill battle for PGN
Indonesian gas is currently in a precarious position, where the government needs to ...
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- Bhatia International Limited - India
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- Semirara Mining Corp, Philippines
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- Iligan Light & Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Heidelberg Cement - Germany
- White Energy Company Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- Kumho Petrochemical, South Korea
- Simpson Spence & Young - Indonesia
- Standard Chartered Bank - UAE
- Medco Energi Mining Internasional
- Chettinad Cement Corporation Ltd - India
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Metalloyd Limited - United Kingdom
- Thai Mozambique Logistica
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Miang Besar Coal Terminal - Indonesia
- Madhucon Powers Ltd - India
- Energy Development Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- MS Steel International - UAE
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- Ind-Barath Power Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Romanian Commodities Exchange
- CNBM International Corporation - China
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Renaissance Capital - South Africa
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- GN Power Mariveles Coal Plant, Philippines
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Indian Energy Exchange, India
- Orica Mining Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- Kartika Selabumi Mining - Indonesia
- Siam City Cement PLC, Thailand
- Gujarat Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Minerals Council of Australia
- McConnell Dowell - Australia
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Billiton Holdings Pty Ltd - Australia
- Eastern Energy - Thailand
- IHS Mccloskey Coal Group - USA
- Siam City Cement - Thailand
- Samtan Co., Ltd - South Korea
- Indogreen Group - Indonesia
- GAC Shipping (India) Pvt Ltd
- Videocon Industries ltd - India
- Marubeni Corporation - India
- Parliament of New Zealand
- PTC India Limited - India
- Carbofer General Trading SA - India
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- Georgia Ports Authority, United States
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Anglo American - United Kingdom
- Electricity Generating Authority of Thailand
- Mercuria Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Port Waratah Coal Services - Australia
- Ceylon Electricity Board - Sri Lanka
- Directorate General of MIneral and Coal - Indonesia
- Bangladesh Power Developement Board
- Manunggal Multi Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Larsen & Toubro Limited - India
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Jindal Steel & Power Ltd - India
- Coal and Oil Company - UAE
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Cigading International Bulk Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- Meenaskhi Energy Private Limited - India
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- Mintek Dendrill Indonesia
- Pendopo Energi Batubara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kaltim Prima Coal - Indonesia
- Sakthi Sugars Limited - India
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Ambuja Cements Ltd - India
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Energy Link Ltd, New Zealand
- Banpu Public Company Limited - Thailand
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- Edison Trading Spa - Italy
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- Kobexindo Tractors - Indoneisa
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- TeaM Sual Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Directorate Of Revenue Intelligence - India
- Orica Australia Pty. Ltd.
- Vedanta Resources Plc - India
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Bukit Baiduri Energy - Indonesia
- PowerSource Philippines DevCo
- Power Finance Corporation Ltd., India
- GMR Energy Limited - India
- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Planning Commission, India
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Savvy Resources Ltd - HongKong
- Parry Sugars Refinery, India
- Bhushan Steel Limited - India
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- Electricity Authority, New Zealand
- The University of Queensland
- Ministry of Mines - Canada
- Karaikal Port Pvt Ltd - India
- London Commodity Brokers - England
- Mercator Lines Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Tamil Nadu electricity Board
- Therma Luzon, Inc, Philippines
- Ministry of Finance - Indonesia
- Bhoruka Overseas - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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