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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, 01 June 21
BUMA PRODUCED 11.4 MILLION TONNES OF COAL IN 4Q 2020, 5% LOWER COMPARED TO 12.2 MILLION TONNES IN 4Q 2019
PT Delta Dunia Makmur Tbk. presents its newsletter with consolidated financial and operating results that include its primary and wholly-owne ...
Sunday, 30 May 21
PAKISTAN IS PLANNING TO END COAL IMPORTS, WORSENING OUTLOOK FOR SOUTH AFRICAN COAL - IEEFA
The growing and irreversible risks being faced by South African coal exporters
As Thungela Resources’ CEO attempts to talk up ...
Sunday, 30 May 21
G7 COAL FINANCE EXIT AND WHY IT MATTERS FOR INDIA - IEEFA
While India doesn’t rely on export credit finance to fund new coal plants, there are material implications
The commitment by the Group o ...
Saturday, 29 May 21
SKULD’S IMO 2020 SULPHUR CAP EXPERIENCE
More than a year has passed since the International Maritime Organization (IMO) mandate for the 0.50% sulphur cap for marine fuel (MARPOL Annex VI) ...
Thursday, 27 May 21
KOMIPO INVITED BIDS FOR 1.56 MILLION TONS OF BITUMINOUS COAL
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) has issued an international tender for total 1,560,000 MT of Bituminous Coal to be used a ...
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- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- Global Business Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhatia International Limited - India
- PTC India Limited - India
- Jaiprakash Power Ventures ltd
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
- The Treasury - Australian Government
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- Aboitiz Power Corporation - Philippines
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Parliament of New Zealand
- PowerSource Philippines DevCo
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- Bhushan Steel Limited - India
- Rashtriya Ispat Nigam Limited - India
- ASAPP Information Group - India
- Karbindo Abesyapradhi - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- Eastern Coal Council - USA
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- India Bulls Power Limited - India
- Mjunction Services Limited - India
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- Attock Cement Pakistan Limited
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Thai Mozambique Logistica
- Australian Commodity Traders Exchange
- Globalindo Alam Lestari - Indonesia
- Cement Manufacturers Association - India
- Kartika Selabumi Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Sindya Power Generating Company Private Ltd
- Price Waterhouse Coopers - Russia
- Essar Steel Hazira Ltd - India
- Malabar Cements Ltd - India
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The State Trading Corporation of India Ltd
- PetroVietnam Power Coal Import and Supply Company
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Anglo American - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Tata Chemicals Ltd - India
- Iligan Light & Power Inc, Philippines
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kaltim Prima Coal - Indonesia
- Wood Mackenzie - Singapore
- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- Merrill Lynch Commodities Europe
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- Heidelberg Cement - Germany
- Australian Coal Association
- SMC Global Power, Philippines
- White Energy Company Limited
- Neyveli Lignite Corporation Ltd, - India
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Central Java Power - Indonesia
- Wilmar Investment Holdings
- Goldman Sachs - Singapore
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Mercuria Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Videocon Industries ltd - India
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- Agrawal Coal Company - India
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- Rio Tinto Coal - Australia
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ind-Barath Power Infra Limited - India
- Coal and Oil Company - UAE
- Uttam Galva Steels Limited - India
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- Formosa Plastics Group - Taiwan
- Romanian Commodities Exchange
- Chamber of Mines of South Africa
- Altura Mining Limited, Indonesia
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Orica Mining Services - Indonesia
- Vedanta Resources Plc - India
- Cigading International Bulk Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Intertek Mineral Services - Indonesia
- Kumho Petrochemical, South Korea
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- Bangladesh Power Developement Board
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- Manunggal Multi Energi - Indonesia
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Sree Jayajothi Cements Limited - India
- Barasentosa Lestari - Indonesia
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- VISA Power Limited - India
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- Directorate Of Revenue Intelligence - India
- Central Electricity Authority - India
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Lanco Infratech Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Ministry of Finance - Indonesia
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- Baramulti Group, Indonesia
- Bharathi Cement Corporation - India
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- Bulk Trading Sa - Switzerland
- Sarangani Energy Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Salva Resources Pvt Ltd - India
- Carbofer General Trading SA - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IEA Clean Coal Centre - UK
- Dalmia Cement Bharat India
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