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