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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, 09 August 21
CHINA COAL INVENTORY THINS AMID PEAK POWER DEMAND- STATE MEDIA : REUTERS
China’s coal inventories have dropped to near historic lows since August due to peak summer electricity demand and transportation bottlenecks ...
Wednesday, 04 August 21
THE INDONESIAN COAL PRICE REFERENCE SURGED TO A FRESH RECORD HIGH OF USD 130.99 A TON IN AUGUST 2021
COALspot.com: The Indonesian Coal Price Reference ( HBA) surged to a fresh record high of USD 130.99 a ton in August 2021.
The ...
Wednesday, 04 August 21
MARKET INSIGHT - INTERMODAL
Unlike the Dry Bulk and Container sectors where freight rates have surged into 2021, the tankers market continues to experience lackluster earnings ...
Sunday, 01 August 21
SEABORNE HARD COAL TRADE IN 2020 DECREASED BY 149 MILLION MT, OR 12.1%, TO 1,083 MILLION MT - GERMAN COAL IMPORTERS ASSOCIATION
- Reduced coal-fired power plant fleet secures Germany’s power supply in severe winter of 2020/2021; little wind availability and hence stron ...
Wednesday, 28 July 21
IN THE PHILIPPINES, COAL’S DEMISE MAKES WAY FOR A RENEWABLE ENERGY BOOM - IEEFA
Imported gas lock-in could undermine the economic benefits of a clean energy transition
The Philippines’ energy sector is on t ...
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- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- Planning Commission, India
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- Australian Coal Association
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Sinarmas Energy and Mining - Indonesia
- Carbofer General Trading SA - India
- Renaissance Capital - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- Salva Resources Pvt Ltd - India
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Marubeni Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Metalloyd Limited - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- MS Steel International - UAE
- PTC India Limited - India
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wilmar Investment Holdings
- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- Gujarat Sidhee Cement - India
- Chettinad Cement Corporation Ltd - India
- Bhatia International Limited - India
- VISA Power Limited - India
- Mercuria Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Mjunction Services Limited - India
- Altura Mining Limited, Indonesia
- McConnell Dowell - Australia
- Port Waratah Coal Services - Australia
- SMG Consultants - Indonesia
- Iligan Light & Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- OPG Power Generation Pvt Ltd - India
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
- London Commodity Brokers - England
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- PNOC Exploration Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Interocean Group of Companies - India
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- Oldendorff Carriers - Singapore
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhushan Steel Limited - India
- Uttam Galva Steels Limited - India
- Malabar Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Indian Energy Exchange, India
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- Intertek Mineral Services - Indonesia
- CNBM International Corporation - China
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Karbindo Abesyapradhi - Indoneisa
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Indogreen Group - Indonesia
- Electricity Authority, New Zealand
- Cement Manufacturers Association - India
- Larsen & Toubro Limited - India
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- Orica Mining Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- Siam City Cement - Thailand
- Australian Commodity Traders Exchange
- Barasentosa Lestari - Indonesia
- Agrawal Coal Company - India
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- Tamil Nadu electricity Board
- Kaltim Prima Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- Binh Thuan Hamico - Vietnam
- Mintek Dendrill Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Makmur.PT - Indonesia
- Posco Energy - South Korea
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dalmia Cement Bharat India
- Xindia Steels Limited - India
- Mercator Lines Limited - India
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Indika Energy - Indonesia
- SMC Global Power, Philippines
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- Merrill Lynch Commodities Europe
- Coastal Gujarat Power Limited - India
- Anglo American - United Kingdom
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- India Bulls Power Limited - India
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Deloitte Consulting - India
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