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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, 02 August 24
COAL MARKET DEVELOPMENTS: FALLING PRICES AMID RECORD-HIGH OUTPUT - WORLD BANK
Coal prices inched up in May (m/m) following an 8 percent decline in 2024Q1. The Australian and South African benchmarks have plummeted more ...
Friday, 26 July 24
FUELEU MARITME IS COMING. IS YOUR CHARTERPARTY READY? - GARD
With less than six months to implementation of FuelEU Maritime in EU and EEA trades, there has been little published advice regarding how to alloca ...
Thursday, 04 July 24
INDIA'S COAL PRODUCTION RISES 14% IN JUNE - PTI
The country’s coal production rose by 14.49% to 84.63 million tonne (MT) in June. The country’s coal output was 73.92 MT in June last f ...
Tuesday, 02 July 24
NTPC CAPTIVE COAL OUTPUT GROWS 15% IN Q1; DESPATCH RISES 17%
State-owned NTPC on Monday reported a 15 per cent year-on-year increase in the production of coal from captives mines to 9.862 metric million tonne ...
Friday, 28 June 24
KOSPO INVITED BIDS FOR 400,000 MT OF MINIMUM 4000 NCV COAL FOR FIVE YEARS
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for total 400,000 MT of Low Calorific Value Coal for 5 years starting from July 2024 until ...
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- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- Eastern Coal Council - USA
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Holcim Trading Pte Ltd - Singapore
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- Timah Investasi Mineral - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- TeaM Sual Corporation - Philippines
- Makarim & Taira - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Medco Energi Mining Internasional
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- CNBM International Corporation - China
- TNB Fuel Sdn Bhd - Malaysia
- Essar Steel Hazira Ltd - India
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- Chamber of Mines of South Africa
- Economic Council, Georgia
- Tamil Nadu electricity Board
- Planning Commission, India
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining Corp, Philippines
- Siam City Cement PLC, Thailand
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- The State Trading Corporation of India Ltd
- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- Indika Energy - Indonesia
- SMG Consultants - Indonesia
- Port Waratah Coal Services - Australia
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- South Luzon Thermal Energy Corporation
- Parliament of New Zealand
- Straits Asia Resources Limited - Singapore
- Karaikal Port Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Manunggal Multi Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- Kaltim Prima Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- ICICI Bank Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Anglo American - United Kingdom
- Bhatia International Limited - India
- Central Electricity Authority - India
- Kideco Jaya Agung - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- PTC India Limited - India
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- Globalindo Alam Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Bhoruka Overseas - Indonesia
- Posco Energy - South Korea
- Cigading International Bulk Terminal - Indonesia
- Deloitte Consulting - India
- Banpu Public Company Limited - Thailand
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- Bukit Makmur.PT - Indonesia
- Agrawal Coal Company - India
- Bharathi Cement Corporation - India
- Commonwealth Bank - Australia
- New Zealand Coal & Carbon
- Kapuas Tunggal Persada - Indonesia
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Ambuja Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- India Bulls Power Limited - India
- PNOC Exploration Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- GMR Energy Limited - India
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Savvy Resources Ltd - HongKong
- Oldendorff Carriers - Singapore
- Electricity Authority, New Zealand
- Salva Resources Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- The Treasury - Australian Government
- Maheswari Brothers Coal Limited - India
- The University of Queensland
- Kartika Selabumi Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Thai Mozambique Logistica
- Aditya Birla Group - India
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maharashtra Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- International Coal Ventures Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Coalindo Energy - Indonesia
- Central Java Power - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Wilmar Investment Holdings
- White Energy Company Limited
- Samtan Co., Ltd - South Korea
- Orica Mining Services - Indonesia
- Petron Corporation, Philippines
- Uttam Galva Steels Limited - India
- Ministry of Transport, Egypt
- CIMB Investment Bank - Malaysia
- Thiess Contractors Indonesia
- OPG Power Generation Pvt Ltd - India
- ASAPP Information Group - India
- Cement Manufacturers Association - India
- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- McConnell Dowell - Australia
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- Madhucon Powers Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Indogreen Group - Indonesia
- Latin American Coal - Colombia
- Sree Jayajothi Cements Limited - India
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- GVK Power & Infra Limited - India
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Mjunction Services Limited - India
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- Ministry of Finance - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Attock Cement Pakistan Limited
- Mintek Dendrill Indonesia
- Goldman Sachs - Singapore
- Mercuria Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhushan Steel Limited - India
- Sinarmas Energy and Mining - Indonesia
- Carbofer General Trading SA - India
- IHS Mccloskey Coal Group - USA
- Eastern Energy - Thailand
- Sical Logistics Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Energy Exchange, India
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
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