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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, 14 June 24
NEXTDECADE, SAUDI ARAMCO SIGN 20-YEAR LNG SUPPLY DEAL - REUTERS
U.S. liquefied natural gas (LNG) provider NextDecade has signed a non-binding agreement with Saudi Aramco 2222.SE to supply 1.2 million tonnes per ...
Friday, 14 June 24
NEWBUILDING PRICES CLIMB 3% TO HIGHEST LEVEL IN 16 YEARS - NIELS RASMUSSEN
“Since the start of the year, newbuilding prices have risen 3% to their highest level since 2008. Compared to their most recent low in late 2 ...
Friday, 14 June 24
INDIA TARGETS HIGHER DOMESTIC COAL PRODUCTION, REDUCED IMPORTS: GOVT - REUTERS
India wants to reduce coal imports and increase domestic production, federal coal minister G. Kishan Reddy said on Thursday.
The cou ...
Thursday, 13 June 24
US LNG TO ASIA FOR POWER GENERATION EXPECTED TO CUT EMISSIONS VERSUS COAL - RYSTAD ENERGY
The value-chain emissions of liquified natural gas (LNG) are lower on average than for coal-fired power generation, even when the fuel is shipp ...
Wednesday, 12 June 24
CHINA ACCOUNTS FOR 16.3% OF AUSTRALIA'S COAL EXPORTS, FOLLOWED BY INDIA 14.4% - BANCHERO COSTA
Global coal trade has really picked up pace in recent months, and is now fully back to pre-Covid levels says Banchero Costa in its latest report.
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- Chamber of Mines of South Africa
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- McConnell Dowell - Australia
- Semirara Mining and Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- Deloitte Consulting - India
- Australian Commodity Traders Exchange
- The Treasury - Australian Government
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- Simpson Spence & Young - Indonesia
- TeaM Sual Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Ambuja Cements Ltd - India
- Romanian Commodities Exchange
- Trasteel International SA, Italy
- Marubeni Corporation - India
- Bayan Resources Tbk. - Indonesia
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- Heidelberg Cement - Germany
- Vizag Seaport Private Limited - India
- Malabar Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- TNB Fuel Sdn Bhd - Malaysia
- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
- Mercator Lines Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Indogreen Group - Indonesia
- Coal and Oil Company - UAE
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
- Sical Logistics Limited - India
- The State Trading Corporation of India Ltd
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- The University of Queensland
- Merrill Lynch Commodities Europe
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- London Commodity Brokers - England
- Bhushan Steel Limited - India
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- Orica Australia Pty. Ltd.
- ASAPP Information Group - India
- Tata Chemicals Ltd - India
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- PowerSource Philippines DevCo
- Australian Coal Association
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Petron Corporation, Philippines
- Mjunction Services Limited - India
- MS Steel International - UAE
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Makarim & Taira - Indonesia
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- Lanco Infratech Ltd - India
- White Energy Company Limited
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- Vedanta Resources Plc - India
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Energy Link Ltd, New Zealand
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Neyveli Lignite Corporation Ltd, - India
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Formosa Plastics Group - Taiwan
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Cement Manufacturers Association - India
- Indonesian Coal Mining Association
- International Coal Ventures Pvt Ltd - India
- Parliament of New Zealand
- Wilmar Investment Holdings
- Ministry of Transport, Egypt
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- Sree Jayajothi Cements Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wood Mackenzie - Singapore
- Essar Steel Hazira Ltd - India
- Kobexindo Tractors - Indoneisa
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Georgia Ports Authority, United States
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Edison Trading Spa - Italy
- GN Power Mariveles Coal Plant, Philippines
- Ceylon Electricity Board - Sri Lanka
- Sinarmas Energy and Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- Orica Mining Services - Indonesia
- Tamil Nadu electricity Board
- SN Aboitiz Power Inc, Philippines
- Videocon Industries ltd - India
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Banpu Public Company Limited - Thailand
- Carbofer General Trading SA - India
- Eastern Energy - Thailand
- Sojitz Corporation - Japan
- Bukit Baiduri Energy - Indonesia
- Siam City Cement PLC, Thailand
- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Rio Tinto Coal - Australia
- Posco Energy - South Korea
- Semirara Mining Corp, Philippines
- Goldman Sachs - Singapore
- OPG Power Generation Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- Interocean Group of Companies - India
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- GMR Energy Limited - India
- Miang Besar Coal Terminal - Indonesia
- Parry Sugars Refinery, India
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