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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$1.7¢/kWh more.
Solar and wind are now the lowest-cost energy sources globally and are expected to become even cheaper by 2030. Notably, maintaining coal-fired power plants is more expensive than constructing entirely new, rapidly built renewable energy plants.
Consequently, the gradual retirement of coal-fired power plants and a concerted transition to renewable energy sources will be a win-win solution for Indonesia to fulfill its Paris Agreement commitments and financial goals.
Mutya Yustika, IEEFA
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Wednesday, 14 April 21
MARKET INSIGHT - INTERMODAL
After a series of months where the dry bulk sector was attracting most of the buying interest, tankers SnP activity spiked in the previous weeks. O ...
Tuesday, 13 April 21
INDONESIAN COAL PRICE REFERENCE IN APRIL UP AGAIN ON FIRM DEMAND
COALspot.com: The Indonesia coal price reference for April 2021 settles at US$ 86.68 per ton FOB vessel.
The Indonesia coal pr ...
Monday, 12 April 21
CHINA'S ECONOMIC RECOVERY PUSHES COAL MINES TO INCREASE YIELD - GLOBAL TIMES
China’s fast economic rebound from coronavirus has driven up electricity demand, leading to higher consumption of coal which is seeing rising ...
Monday, 12 April 21
GLOBAL COAL PRODUCTION EXPECTED TO RISE BY 3.5% IN 2021, SAYS GLOBALDATA
Global coal output is estimated to have declined by 2% in 2020 due to COVID-19-related lockdowns and restrictions, with significant reductions obse ...
Wednesday, 07 April 21
KOMIPO ISSUED A TENDER FOR TOTAL 1,560,000 METRIC TONS OF BITUMINOUS COAL
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a tender for total 1,560,000 Metric Tons of Bituminous coal for i ...
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- Global Coal Blending Company Limited - Australia
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
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- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- PTC India Limited - India
- Indonesian Coal Mining Association
- Electricity Generating Authority of Thailand
- Kepco SPC Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Videocon Industries ltd - India
- GMR Energy Limited - India
- VISA Power Limited - India
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- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- IHS Mccloskey Coal Group - USA
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Vizag Seaport Private Limited - India
- Chettinad Cement Corporation Ltd - India
- McConnell Dowell - Australia
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- Ministry of Finance - Indonesia
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- Power Finance Corporation Ltd., India
- Ambuja Cements Ltd - India
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- ASAPP Information Group - India
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Parliament of New Zealand
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- SMC Global Power, Philippines
- Tamil Nadu electricity Board
- Indian Energy Exchange, India
- Mintek Dendrill Indonesia
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- India Bulls Power Limited - India
- Interocean Group of Companies - India
- Petrochimia International Co. Ltd.- Taiwan
- Ceylon Electricity Board - Sri Lanka
- Karaikal Port Pvt Ltd - India
- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Karbindo Abesyapradhi - Indoneisa
- Directorate Of Revenue Intelligence - India
- Tata Chemicals Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Latin American Coal - Colombia
- Vijayanagar Sugar Pvt Ltd - India
- Larsen & Toubro Limited - India
- SN Aboitiz Power Inc, Philippines
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Grasim Industreis Ltd - India
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- Bukit Makmur.PT - Indonesia
- Carbofer General Trading SA - India
- Miang Besar Coal Terminal - Indonesia
- Star Paper Mills Limited - India
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Posco Energy - South Korea
- Bharathi Cement Corporation - India
- Parry Sugars Refinery, India
- Siam City Cement PLC, Thailand
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Siam City Cement - Thailand
- Australian Coal Association
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- Cigading International Bulk Terminal - Indonesia
- Electricity Authority, New Zealand
- Bukit Baiduri Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- Aboitiz Power Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Bangladesh Power Developement Board
- Energy Link Ltd, New Zealand
- Anglo American - United Kingdom
- Planning Commission, India
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Aditya Birla Group - India
- Singapore Mercantile Exchange
- Minerals Council of Australia
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Bhoruka Overseas - Indonesia
- Mercuria Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- Attock Cement Pakistan Limited
- San Jose City I Power Corp, Philippines
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coalindo Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- Samtan Co., Ltd - South Korea
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- Baramulti Group, Indonesia
- Eastern Coal Council - USA
- Barasentosa Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Jindal Steel & Power Ltd - India
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- The University of Queensland
- CNBM International Corporation - China
- Bulk Trading Sa - Switzerland
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Renaissance Capital - South Africa
- Globalindo Alam Lestari - Indonesia
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- Coastal Gujarat Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Ministry of Mines - Canada
- Kaltim Prima Coal - Indonesia
- Thiess Contractors Indonesia
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Ind-Barath Power Infra Limited - India
- Sarangani Energy Corporation, Philippines
- Romanian Commodities Exchange
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining and Power Corporation, Philippines
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