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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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Monday, 08 January 24
SEABORNE TRADE REACHES 12.4BN TONNES - CLARKSONS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
Monday, 08 January 24
CAPESIZES START THE NEW YEAR ON POSITIVE NOTE - BALTIC EXCHANGE
Capesize
This week the capsize market has been marked by a mix of activities and challenges. Despite a slow start following the Christmas and N ...
Friday, 05 January 24
MORGAN STANLEY SEES LOWER OIL PRICES IN 2024 ON OVERSUPPLY CONCERNS - REUTERS
Morgan Stanley sees Brent crude prices anchored near $80 per barrel in the first half in 2024 before declining towards the end of the year as it ex ...
Friday, 05 January 24
INDIA'S COAL OUTPUT RISES NEARLY 11 PC IN DEC TO 92.87 MT - PTI
India’s coal production increased by 10.75 per cent to 92.87 million tonne in December 2023 as compared to the year-ago period, an official s ...
Friday, 05 January 24
BANGLADESH’S 2023 COAL-FIRED POWER OUTPUT TRIPLED, EASING SHORTAGES - REUTERS
Bangladesh nearly tripled its coal-fired power output in 2023, a Reuters analysis of government data showed, helping it tide over the worst power s ...
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- IEA Clean Coal Centre - UK
- Vijayanagar Sugar Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- Kaltim Prima Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- GVK Power & Infra Limited - India
- London Commodity Brokers - England
- Kepco SPC Power Corporation, Philippines
- Makarim & Taira - Indonesia
- TeaM Sual Corporation - Philippines
- Planning Commission, India
- GN Power Mariveles Coal Plant, Philippines
- Renaissance Capital - South Africa
- Antam Resourcindo - Indonesia
- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- Parliament of New Zealand
- Latin American Coal - Colombia
- Africa Commodities Group - South Africa
- Mjunction Services Limited - India
- Central Electricity Authority - India
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Meralco Power Generation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- SMG Consultants - Indonesia
- Sarangani Energy Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- Goldman Sachs - Singapore
- Holcim Trading Pte Ltd - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Jaiprakash Power Ventures ltd
- MS Steel International - UAE
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- Globalindo Alam Lestari - Indonesia
- ASAPP Information Group - India
- Eastern Energy - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- Essar Steel Hazira Ltd - India
- McConnell Dowell - Australia
- Manunggal Multi Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- Toyota Tsusho Corporation, Japan
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- India Bulls Power Limited - India
- Chamber of Mines of South Africa
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Mintek Dendrill Indonesia
- Oldendorff Carriers - Singapore
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Samtan Co., Ltd - South Korea
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- Minerals Council of Australia
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
- Edison Trading Spa - Italy
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Kapuas Tunggal Persada - Indonesia
- Attock Cement Pakistan Limited
- Pipit Mutiara Jaya. PT, Indonesia
- PNOC Exploration Corporation - Philippines
- Marubeni Corporation - India
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- Intertek Mineral Services - Indonesia
- Posco Energy - South Korea
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- Ambuja Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Coalindo Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- ICICI Bank Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Grasim Industreis Ltd - India
- Barasentosa Lestari - Indonesia
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Therma Luzon, Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Thiess Contractors Indonesia
- Banpu Public Company Limited - Thailand
- Bhatia International Limited - India
- South Luzon Thermal Energy Corporation
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- GMR Energy Limited - India
- Aboitiz Power Corporation - Philippines
- Lanco Infratech Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- CNBM International Corporation - China
- White Energy Company Limited
- Indonesian Coal Mining Association
- The State Trading Corporation of India Ltd
- Indian Oil Corporation Limited
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
- Kumho Petrochemical, South Korea
- Straits Asia Resources Limited - Singapore
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- Ministry of Finance - Indonesia
- Coastal Gujarat Power Limited - India
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- Chettinad Cement Corporation Ltd - India
- Siam City Cement - Thailand
- PowerSource Philippines DevCo
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- Kobexindo Tractors - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- The University of Queensland
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- Altura Mining Limited, Indonesia
- Indogreen Group - Indonesia
- Anglo American - United Kingdom
- Bhushan Steel Limited - India
- Iligan Light & Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Agrawal Coal Company - India
- Asmin Koalindo Tuhup - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- Electricity Authority, New Zealand
- European Bulk Services B.V. - Netherlands
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
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