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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$1.7¢/kWh more.
Solar and wind are now the lowest-cost energy sources globally and are expected to become even cheaper by 2030. Notably, maintaining coal-fired power plants is more expensive than constructing entirely new, rapidly built renewable energy plants.
Consequently, the gradual retirement of coal-fired power plants and a concerted transition to renewable energy sources will be a win-win solution for Indonesia to fulfill its Paris Agreement commitments and financial goals.
Mutya Yustika, IEEFA
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Friday, 12 March 21
BATTERIES ARE REPLACING COAL NOT GAS - IEEFA
No amount of government subsidies can halt gas’s decline
Batteries are replacing coal not gas.
Today the early ...
Friday, 12 March 21
RENEWABLES SHOULD BE FOCUS OF VIETNAM’S DRAFT PDP8, NOT COAL AND GAS - IEEFA
Evidence was clear to inform the next stage of Vietnam’s power development
Vietnam’s recently published draft power deve ...
Thursday, 11 March 21
U.S. TO PRODUCE 581 MMST IN 2021, UP 8% FROM 2020 - EIA
EIA expects U.S. coal production to total 581 MMst in 2021, 42 MMst (8%) more than in 2020. In 2022, EIA expects coal production to rise by a furth ...
Thursday, 11 March 21
MARKET INSIGHT - INTERMODAL
Assessing the ship repair sector during the first months of 2021, we have come across a new era in which Owners chose the shipyards to repair their ...
Monday, 08 March 21
MARCH 2021 INDONESIA COAL PRICE REFERENCE SETTLES LOWER
COALspot.com: The Indonesia coal price reference for March 2021 settles at US$ 84.49 per ton FOB vessel.
The Indonesia coal pr ...
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- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- GVK Power & Infra Limited - India
- Minerals Council of Australia
- Sindya Power Generating Company Private Ltd
- ICICI Bank Limited - India
- Bhushan Steel Limited - India
- Electricity Authority, New Zealand
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Africa Commodities Group - South Africa
- Cement Manufacturers Association - India
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Salva Resources Pvt Ltd - India
- Australian Coal Association
- IHS Mccloskey Coal Group - USA
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- Planning Commission, India
- Sojitz Corporation - Japan
- VISA Power Limited - India
- Bhatia International Limited - India
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement - Thailand
- Globalindo Alam Lestari - Indonesia
- Makarim & Taira - Indonesia
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Lanco Infratech Ltd - India
- Ministry of Transport, Egypt
- India Bulls Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Indika Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- Mintek Dendrill Indonesia
- Altura Mining Limited, Indonesia
- Tamil Nadu electricity Board
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Sical Logistics Limited - India
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indonesian Coal Mining Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Central Electricity Authority - India
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- Thiess Contractors Indonesia
- Savvy Resources Ltd - HongKong
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Billiton Holdings Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Agrawal Coal Company - India
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- The University of Queensland
- Jaiprakash Power Ventures ltd
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Coal and Oil Company - UAE
- Romanian Commodities Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Grasim Industreis Ltd - India
- Meenaskhi Energy Private Limited - India
- The State Trading Corporation of India Ltd
- Indian Oil Corporation Limited
- Maheswari Brothers Coal Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Attock Cement Pakistan Limited
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- Bayan Resources Tbk. - Indonesia
- Trasteel International SA, Italy
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Carbofer General Trading SA - India
- GMR Energy Limited - India
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Semirara Mining Corp, Philippines
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- Kumho Petrochemical, South Korea
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Electricity Generating Authority of Thailand
- ASAPP Information Group - India
- Gujarat Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- White Energy Company Limited
- Rio Tinto Coal - Australia
- New Zealand Coal & Carbon
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- Renaissance Capital - South Africa
- PNOC Exploration Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Meralco Power Generation, Philippines
- Price Waterhouse Coopers - Russia
- Aboitiz Power Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Dalmia Cement Bharat India
- Mjunction Services Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- Banpu Public Company Limited - Thailand
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Mercuria Energy - Indonesia
- Edison Trading Spa - Italy
- Holcim Trading Pte Ltd - Singapore
- Kideco Jaya Agung - Indonesia
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Energy Link Ltd, New Zealand
- SN Aboitiz Power Inc, Philippines
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Videocon Industries ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- Eastern Coal Council - USA
- PowerSource Philippines DevCo
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Latin American Coal - Colombia
- Riau Bara Harum - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- London Commodity Brokers - England
- MS Steel International - UAE
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- Oldendorff Carriers - Singapore
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