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