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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, 12 August 21
ONLY 3 VLCCS SOLD FOR DEMOLITION IN 2021 AS SECONDHAND PRICES TEMPT - BIMCO
During the first seven months of 2021, only three actively trading Very Large Crude Carriers (VLCCs) have been sold for demolition. The current mar ...
Wednesday, 11 August 21
U.S: EIA EXPECTS COAL EXPORTS TO TOTAL 90 MMST IN 2021, 30% INCREASE FROM 2020
Coal production in EIA's forecast totals 607 million short tons (MMst) in 2021, an increase of 13% over 2020.
EIA is also ...
Wednesday, 11 August 21
MARKET INSIGHT - INTERMODAL
Energy is at the core of the global climate dialogue as the climate challenge is essentially an energy challenge. Policy experts around the world a ...
Tuesday, 10 August 21
34 INDONESIAN COAL COMPANIES TEMPORARILY BANNED FOR COAL EXPORTS
The Ministry of Energy and Mineral Resources (ESDM) has imposed sanctions in the form of a coal export ban for 34 coal companies as reported by CNB ...
Monday, 09 August 21
AIIB MAY OFFICIALLY END COAL FINANCING IN 2022 - CHINA DAILY
The Asian Infrastructure Investment Bank may officially rule out coal projects if it updates its energy strategy next year, after shunning funding ...
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- Rio Tinto Coal - Australia
- SMG Consultants - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Coalindo Energy - Indonesia
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- Ministry of Transport, Egypt
- Global Coal Blending Company Limited - Australia
- Kartika Selabumi Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Wilmar Investment Holdings
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sakthi Sugars Limited - India
- Semirara Mining Corp, Philippines
- Latin American Coal - Colombia
- SMC Global Power, Philippines
- Indonesian Coal Mining Association
- Siam City Cement - Thailand
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Vijayanagar Sugar Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Bhoruka Overseas - Indonesia
- Mercator Lines Limited - India
- Vedanta Resources Plc - India
- Kapuas Tunggal Persada - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Electricity Authority, New Zealand
- Bhushan Steel Limited - India
- The University of Queensland
- Sarangani Energy Corporation, Philippines
- Tata Chemicals Ltd - India
- Straits Asia Resources Limited - Singapore
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Parliament of New Zealand
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dalmia Cement Bharat India
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Mintek Dendrill Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- Binh Thuan Hamico - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- New Zealand Coal & Carbon
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- Posco Energy - South Korea
- Parry Sugars Refinery, India
- Marubeni Corporation - India
- Singapore Mercantile Exchange
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Ministry of Mines - Canada
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Thiess Contractors Indonesia
- Attock Cement Pakistan Limited
- Bukit Baiduri Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- London Commodity Brokers - England
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- ASAPP Information Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Metalloyd Limited - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Leighton Contractors Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- Minerals Council of Australia
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- Mjunction Services Limited - India
- TeaM Sual Corporation - Philippines
- McConnell Dowell - Australia
- TNB Fuel Sdn Bhd - Malaysia
- European Bulk Services B.V. - Netherlands
- Australian Coal Association
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Bulk Trading Sa - Switzerland
- IHS Mccloskey Coal Group - USA
- Bhatia International Limited - India
- Agrawal Coal Company - India
- Eastern Energy - Thailand
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- ICICI Bank Limited - India
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- Makarim & Taira - Indonesia
- Iligan Light & Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kalimantan Lumbung Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Carbofer General Trading SA - India
- Sical Logistics Limited - India
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Xindia Steels Limited - India
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- Pendopo Energi Batubara - Indonesia
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Price Waterhouse Coopers - Russia
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Meralco Power Generation, Philippines
- Uttam Galva Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- The State Trading Corporation of India Ltd
- Karbindo Abesyapradhi - Indoneisa
- Sindya Power Generating Company Private Ltd
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- Jindal Steel & Power Ltd - India
- White Energy Company Limited
- Miang Besar Coal Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Globalindo Alam Lestari - Indonesia
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