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