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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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Thursday, 25 March 21
'OMNIBUS LAW' REGULATION ON INDONESIA’S ENERGY AND MINING SECTORS TO BOOST COAL PROCESSING BUT ALSO RAISES QUESTIONS - ABNR
February 2021 saw the issuance of a raft of new government regulations to give effect to the reformist Job Creation Law (colloquially known as the ...
Thursday, 25 March 21
PROPOSED SWITCH FROM COAL TO LNG THREATENS RENEWABLE ENERGY DEVELOPMENT IN ASIA - IEEFA
Renewables offer an ever cheaper, financially sustainable and energy secure alternative, better able to support developing nations
A ...
Thursday, 25 March 21
MAJOR INVESTMENT ADVISORS BLACKROCK AND MEKETA PROVIDE A FIDUCIARY PATH THROUGH THE ENERGY TRANSITION - IEEFA
BlackRock and Meketa say divestment from fossil fuels improves, not weakens, investment returns
Two major financial management firms ...
Thursday, 25 March 21
EUROPE PASSES MILESTONE WITH HALF OF COAL PLANTS CLOSED OR SET TO RETIRE BY 2030 - EURACTIV
Half of Europe’s 324 coal-fueled power plants have either closed or announced a retirement date before 2030, it emerged on Monday (22 March) ...
Wednesday, 24 March 21
MARKET INSIGHT - INTERMODAL
Since the start of the pandemic, the shipping industry has efficiently responded to ensure the continuity of operations and hence the security of s ...
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- The University of Queensland
- Bukit Baiduri Energy - Indonesia
- The Treasury - Australian Government
- Trasteel International SA, Italy
- International Coal Ventures Pvt Ltd - India
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Chamber of Mines of South Africa
- Uttam Galva Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Tamil Nadu electricity Board
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Lanco Infratech Ltd - India
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- Australian Coal Association
- Jaiprakash Power Ventures ltd
- Thai Mozambique Logistica
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Vizag Seaport Private Limited - India
- Mintek Dendrill Indonesia
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- McConnell Dowell - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Kideco Jaya Agung - Indonesia
- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
- Edison Trading Spa - Italy
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Coalindo Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Power Finance Corporation Ltd., India
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Gujarat Sidhee Cement - India
- Sindya Power Generating Company Private Ltd
- Indian Energy Exchange, India
- SMG Consultants - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Price Waterhouse Coopers - Russia
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Kumho Petrochemical, South Korea
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- Vedanta Resources Plc - India
- Krishnapatnam Port Company Ltd. - India
- Maharashtra Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- Jorong Barutama Greston.PT - Indonesia
- Wood Mackenzie - Singapore
- OPG Power Generation Pvt Ltd - India
- ASAPP Information Group - India
- Thiess Contractors Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Ceylon Electricity Board - Sri Lanka
- Madhucon Powers Ltd - India
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Sojitz Corporation - Japan
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petron Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- Mercuria Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- Wilmar Investment Holdings
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- Rio Tinto Coal - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Agrawal Coal Company - India
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- Marubeni Corporation - India
- Energy Link Ltd, New Zealand
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Ministry of Mines - Canada
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Star Paper Mills Limited - India
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- Commonwealth Bank - Australia
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Chettinad Cement Corporation Ltd - India
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Essar Steel Hazira Ltd - India
- Central Java Power - Indonesia
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- Global Business Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- GN Power Mariveles Coal Plant, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parliament of New Zealand
- VISA Power Limited - India
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- GMR Energy Limited - India
- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Goldman Sachs - Singapore
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Neyveli Lignite Corporation Ltd, - India
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Salva Resources Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Ministry of Transport, Egypt
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Borneo Indobara - Indonesia
- Maheswari Brothers Coal Limited - India
- Indian Oil Corporation Limited
- Orica Australia Pty. Ltd.
- Eastern Coal Council - USA
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
- PNOC Exploration Corporation - Philippines
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- Romanian Commodities Exchange
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