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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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Friday, 10 November 23
THE COMMODITIES FEED: OIL UNDER PRESSURE - ING
Energy – Brent plummets
The oil market came under significant pressure yesterday. ICE Brent settled 4.19% lower on the day and ...
Friday, 10 November 23
COAL USE AT U.S. POWER PLANTS CONTINUES DOWNWARD SPIRAL; FULL IMPACT ON MINES TO BE FELT IN 2024 - IEEFA
This year, the use of coal by the U.S.’s power producers has been so anemic that the fuel has not achieved a 20% market share in any month so ...
Friday, 10 November 23
INDIA: NATIONAL COAL INDEX RISES 3.83 POINTS IN SEPTEMBER AMID HIGHER DEMAND - LIVEMINT
The National Coal Index (NCI) rose 3.83 points to 143.91 in September amid growing demand for coal.
The union coal ministry on Tuesd ...
Thursday, 09 November 23
WE'RE PRODUCING TOO MUCH COAL, OIL AND GAS, REPORT SAYS - WSJ
World leaders pledged in 2015 to reduce emissions in a combined effort to limit climate change.
Now they are stepping up production ...
Thursday, 09 November 23
GREEK AND CHINESE COMPANIES OWN 34% OF THE GLOBAL FLEET’S CARGO CAPACITY - BIMCO
“The global fleet of cargo carrying ships consists of around 61,000 ships with a deadweight capacity of about 2,200 million tonnes. The ships ...
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- White Energy Company Limited
- Malabar Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Videocon Industries ltd - India
- Petron Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Independent Power Producers Association of India
- Makarim & Taira - Indonesia
- Coastal Gujarat Power Limited - India
- GMR Energy Limited - India
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercuria Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- PNOC Exploration Corporation - Philippines
- Bharathi Cement Corporation - India
- Global Coal Blending Company Limited - Australia
- Indonesian Coal Mining Association
- AsiaOL BioFuels Corp., Philippines
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Africa Commodities Group - South Africa
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Iligan Light & Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Dalmia Cement Bharat India
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Medco Energi Mining Internasional
- Indian Oil Corporation Limited
- Riau Bara Harum - Indonesia
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- IEA Clean Coal Centre - UK
- Kobexindo Tractors - Indoneisa
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- Larsen & Toubro Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Tata Chemicals Ltd - India
- Antam Resourcindo - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Savvy Resources Ltd - HongKong
- Altura Mining Limited, Indonesia
- The University of Queensland
- Indo Tambangraya Megah - Indonesia
- Aditya Birla Group - India
- Semirara Mining Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Manunggal Multi Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- New Zealand Coal & Carbon
- Sree Jayajothi Cements Limited - India
- Gujarat Sidhee Cement - India
- Chettinad Cement Corporation Ltd - India
- Kartika Selabumi Mining - Indonesia
- McConnell Dowell - Australia
- Rio Tinto Coal - Australia
- Goldman Sachs - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- Sakthi Sugars Limited - India
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Mjunction Services Limited - India
- Orica Australia Pty. Ltd.
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- Romanian Commodities Exchange
- Sojitz Corporation - Japan
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- Parry Sugars Refinery, India
- Baramulti Group, Indonesia
- Posco Energy - South Korea
- Aboitiz Power Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Minerals Council of Australia
- Lanco Infratech Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Cement Manufacturers Association - India
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- Indogreen Group - Indonesia
- Electricity Authority, New Zealand
- Australian Coal Association
- Kalimantan Lumbung Energi - Indonesia
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Thai Mozambique Logistica
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Barasentosa Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Cigading International Bulk Terminal - Indonesia
- Agrawal Coal Company - India
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Vedanta Resources Plc - India
- Ministry of Mines - Canada
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- India Bulls Power Limited - India
- Bukit Makmur.PT - Indonesia
- Standard Chartered Bank - UAE
- Intertek Mineral Services - Indonesia
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- Edison Trading Spa - Italy
- Coal and Oil Company - UAE
- PowerSource Philippines DevCo
- Kohat Cement Company Ltd. - Pakistan
- CNBM International Corporation - China
- Miang Besar Coal Terminal - Indonesia
- Borneo Indobara - Indonesia
- Sarangani Energy Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Sical Logistics Limited - India
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- Rashtriya Ispat Nigam Limited - India
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- Gujarat Mineral Development Corp Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- Parliament of New Zealand
- Pendopo Energi Batubara - Indonesia
- Energy Link Ltd, New Zealand
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- ASAPP Information Group - India
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Chamber of Mines of South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Uttam Galva Steels Limited - India
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