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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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Tuesday, 02 January 24
COAL TRADE CONTINUES TO HEAD EAST - BALTIC EXCHANGE
The global coal trade, once concentrated in the Pacific and Atlantic basins, is undergoing a significant transformation, as highlighted in the Inte ...
Tuesday, 02 January 24
COAL CARGOES: AVOIDING EXPLOSION AND SELF-HEATING - GARD
KNOWLEDGE TO ELEVATE
Despite its contribution to greenhouse gas emissions, global coal consumption climbed to an all-time high in 2022 and is ...
Tuesday, 02 January 24
SINOPEC FORECASTS CHINA’S COAL CONSUMPTION TO PEAK AROUND 2025 - REUTERS
China Petrochemical Corp, or Sinopec, expects coal consumption to peak around 2025 at 4.37 billion metric tons, the state energy group said in an o ...
Thursday, 07 December 23
CHINA TO SET UP COAL PRODUCTION RESERVE TO STABILISE PRICES - REUTERS
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 ...
Friday, 01 December 23
COAL MINERS GROUP EXPECTS INDONESIA’S 2023 COAL OUTPUT TO SURPASS TARGET - REUTERS
The Indonesian Coal Mining Association (ICMA) expects the country’s 2023 coal output to surpass the official target of 695 million metric ton ...
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- Gujarat Sidhee Cement - India
- Altura Mining Limited, Indonesia
- CIMB Investment Bank - Malaysia
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- SN Aboitiz Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Mercuria Energy - Indonesia
- Medco Energi Mining Internasional
- San Jose City I Power Corp, Philippines
- Malabar Cements Ltd - India
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Thiess Contractors Indonesia
- Uttam Galva Steels Limited - India
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Development Corp, Philippines
- Aditya Birla Group - India
- SMC Global Power, Philippines
- VISA Power Limited - India
- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Borneo Indobara - Indonesia
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- Romanian Commodities Exchange
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Siam City Cement - Thailand
- Sical Logistics Limited - India
- PTC India Limited - India
- Agrawal Coal Company - India
- Jindal Steel & Power Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Iligan Light & Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Minerals Council of Australia
- Madhucon Powers Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- CNBM International Corporation - China
- White Energy Company Limited
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Singapore Mercantile Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- Ministry of Transport, Egypt
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- Chettinad Cement Corporation Ltd - India
- PNOC Exploration Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Grasim Industreis Ltd - India
- Bhatia International Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Ambuja Cements Ltd - India
- IEA Clean Coal Centre - UK
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Holcim Trading Pte Ltd - Singapore
- Formosa Plastics Group - Taiwan
- Sindya Power Generating Company Private Ltd
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- The University of Queensland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- Africa Commodities Group - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- LBH Netherlands Bv - Netherlands
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Sarangani Energy Corporation, Philippines
- Sakthi Sugars Limited - India
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- Sojitz Corporation - Japan
- Star Paper Mills Limited - India
- Heidelberg Cement - Germany
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- Thai Mozambique Logistica
- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- OPG Power Generation Pvt Ltd - India
- Rio Tinto Coal - Australia
- Price Waterhouse Coopers - Russia
- Ministry of Mines - Canada
- Offshore Bulk Terminal Pte Ltd, Singapore
- Standard Chartered Bank - UAE
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kepco SPC Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- Port Waratah Coal Services - Australia
- Coastal Gujarat Power Limited - India
- Tata Chemicals Ltd - India
- Vizag Seaport Private Limited - India
- MS Steel International - UAE
- Parliament of New Zealand
- London Commodity Brokers - England
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- Ind-Barath Power Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- Sinarmas Energy and Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- European Bulk Services B.V. - Netherlands
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- Trasteel International SA, Italy
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Aboitiz Power Corporation - Philippines
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- PowerSource Philippines DevCo
- Vedanta Resources Plc - India
- Indo Tambangraya Megah - Indonesia
- Larsen & Toubro Limited - India
- Electricity Generating Authority of Thailand
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Straits Asia Resources Limited - Singapore
- Marubeni Corporation - India
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
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