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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, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
Monday, 08 January 24
KOSPO TO BUY 80000 MT OF INDONESIAN LOW CALORIFIC VALUE COAL FOR FEB 2024
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for the supply of Indonesian Low Calorific Value Coal from qualified suppliers for Korean ...
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- Sakthi Sugars Limited - India
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- Price Waterhouse Coopers - Russia
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Essar Steel Hazira Ltd - India
- Bukit Baiduri Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Bulk Trading Sa - Switzerland
- Ministry of Mines - Canada
- Samtan Co., Ltd - South Korea
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- Iligan Light & Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Economic Council, Georgia
- Posco Energy - South Korea
- Videocon Industries ltd - India
- London Commodity Brokers - England
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- Goldman Sachs - Singapore
- Indian Oil Corporation Limited
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- Latin American Coal - Colombia
- Siam City Cement - Thailand
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- Larsen & Toubro Limited - India
- Deloitte Consulting - India
- ASAPP Information Group - India
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- Dalmia Cement Bharat India
- Karbindo Abesyapradhi - Indoneisa
- VISA Power Limited - India
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
- International Coal Ventures Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- Ministry of Transport, Egypt
- Orica Mining Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Banpu Public Company Limited - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Wood Mackenzie - Singapore
- Bhushan Steel Limited - India
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- Tata Chemicals Ltd - India
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
- Kalimantan Lumbung Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Marubeni Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- Medco Energi Mining Internasional
- Indika Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Romanian Commodities Exchange
- Agrawal Coal Company - India
- Edison Trading Spa - Italy
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Jindal Steel & Power Ltd - India
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- OPG Power Generation Pvt Ltd - India
- Parry Sugars Refinery, India
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Aboitiz Power Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- Star Paper Mills Limited - India
- Mercuria Energy - Indonesia
- Formosa Plastics Group - Taiwan
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- MS Steel International - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- SMG Consultants - Indonesia
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Barasentosa Lestari - Indonesia
- The Treasury - Australian Government
- Renaissance Capital - South Africa
- Meralco Power Generation, Philippines
- Planning Commission, India
- Electricity Authority, New Zealand
- Vedanta Resources Plc - India
- Lanco Infratech Ltd - India
- Siam City Cement PLC, Thailand
- Australian Commodity Traders Exchange
- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- Eastern Energy - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Parliament of New Zealand
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- PTC India Limited - India
- The University of Queensland
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Grasim Industreis Ltd - India
- Sree Jayajothi Cements Limited - India
- Independent Power Producers Association of India
- Trasteel International SA, Italy
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
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