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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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- Renaissance Capital - South Africa
- Sojitz Corporation - Japan
- Gujarat Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Latin American Coal - Colombia
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- Electricity Authority, New Zealand
- IEA Clean Coal Centre - UK
- Semirara Mining Corp, Philippines
- Kumho Petrochemical, South Korea
- Orica Australia Pty. Ltd.
- Central Electricity Authority - India
- Global Coal Blending Company Limited - Australia
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- Orica Mining Services - Indonesia
- Star Paper Mills Limited - India
- CNBM International Corporation - China
- PNOC Exploration Corporation - Philippines
- Rio Tinto Coal - Australia
- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
- OPG Power Generation Pvt Ltd - India
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- Bharathi Cement Corporation - India
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- Energy Link Ltd, New Zealand
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Posco Energy - South Korea
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Vizag Seaport Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Bhatia International Limited - India
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Aditya Birla Group - India
- New Zealand Coal & Carbon
- Kapuas Tunggal Persada - Indonesia
- GAC Shipping (India) Pvt Ltd
- Formosa Plastics Group - Taiwan
- Savvy Resources Ltd - HongKong
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- IHS Mccloskey Coal Group - USA
- Ind-Barath Power Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Uttam Galva Steels Limited - India
- Global Business Power Corporation, Philippines
- Planning Commission, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- Global Green Power PLC Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Bulk Trading Sa - Switzerland
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- Chamber of Mines of South Africa
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Kideco Jaya Agung - Indonesia
- Sindya Power Generating Company Private Ltd
- Economic Council, Georgia
- Antam Resourcindo - Indonesia
- Edison Trading Spa - Italy
- Wood Mackenzie - Singapore
- Merrill Lynch Commodities Europe
- International Coal Ventures Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- Barasentosa Lestari - Indonesia
- Larsen & Toubro Limited - India
- CIMB Investment Bank - Malaysia
- Wilmar Investment Holdings
- Ministry of Finance - Indonesia
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- Billiton Holdings Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Semirara Mining and Power Corporation, Philippines
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Lanco Infratech Ltd - India
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Essar Steel Hazira Ltd - India
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- Eastern Energy - Thailand
- Siam City Cement PLC, Thailand
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Marubeni Corporation - India
- Carbofer General Trading SA - India
- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Toyota Tsusho Corporation, Japan
- Parliament of New Zealand
- PTC India Limited - India
- Ceylon Electricity Board - Sri Lanka
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Indogreen Group - Indonesia
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- India Bulls Power Limited - India
- Mjunction Services Limited - India
- GVK Power & Infra Limited - India
- Tamil Nadu electricity Board
- Jorong Barutama Greston.PT - Indonesia
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sakthi Sugars Limited - India
- Indian Oil Corporation Limited
- Minerals Council of Australia
- Petron Corporation, Philippines
- The University of Queensland
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Coalindo Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- Borneo Indobara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Meenaskhi Energy Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Independent Power Producers Association of India
- MS Steel International - UAE
- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- London Commodity Brokers - England
- Romanian Commodities Exchange
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- Mercuria Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- The State Trading Corporation of India Ltd
- Jindal Steel & Power Ltd - India
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- Salva Resources Pvt Ltd - India
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