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