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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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Saturday, 06 March 21
AUSTRALIAN COAL: SOME WEAKNESS COULD MATERIALIZE AFTER THE WINTER - ING
Newcastle coal prices remain well supported for now, however as we move out of the winter months we would expect prices to come under pressure. Mea ...
Saturday, 06 March 21
ASIA SEABORNE COAL PRICES START TO RETREAT, CHINA-AUSTRALIA DISPUTE LINGERS - REUTERS
There are signs that the price and demand surge for coal during the recent colder-than-expected winter across North Asia is starting to ease, even ...
Thursday, 04 March 21
HEAD OF JBIC SAYS THE JAPANESE BANK WILL NOT FUND NEW COAL PLANT DEVELOPMENT - NHK NEWS
The governor of the Japan Bank for International Cooperation has said that the government-owned financial institution will stop funding new coal-fi ...
Wednesday, 03 March 21
MARKET INSIGHT - INTERMODAL
Following the recent rally to multi year highs of metal-based commodities, amid an unprecedented global economic stimulus, discussions of an emergi ...
Saturday, 27 February 21
CHINA'S BENCHMARK POWER COAL PRICE EDGES DOWN - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
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- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- The Treasury - Australian Government
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- Indonesian Coal Mining Association
- PTC India Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Australian Coal Association
- Aditya Birla Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Independent Power Producers Association of India
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- MS Steel International - UAE
- Antam Resourcindo - Indonesia
- Mercator Lines Limited - India
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Eastern Coal Council - USA
- Essar Steel Hazira Ltd - India
- Coalindo Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- Anglo American - United Kingdom
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Wilmar Investment Holdings
- Meenaskhi Energy Private Limited - India
- Economic Council, Georgia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- TeaM Sual Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Manunggal Multi Energi - Indonesia
- Chamber of Mines of South Africa
- McConnell Dowell - Australia
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- Formosa Plastics Group - Taiwan
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- The University of Queensland
- OPG Power Generation Pvt Ltd - India
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- Baramulti Group, Indonesia
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Samtan Co., Ltd - South Korea
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercuria Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- San Jose City I Power Corp, Philippines
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- Larsen & Toubro Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Thiess Contractors Indonesia
- Aboitiz Power Corporation - Philippines
- Minerals Council of Australia
- Mintek Dendrill Indonesia
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Gujarat Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- Makarim & Taira - Indonesia
- Bangladesh Power Developement Board
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- Karbindo Abesyapradhi - Indoneisa
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- Uttam Galva Steels Limited - India
- Savvy Resources Ltd - HongKong
- Sical Logistics Limited - India
- New Zealand Coal & Carbon
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Central Electricity Authority - India
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- Mjunction Services Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- Barasentosa Lestari - Indonesia
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Wood Mackenzie - Singapore
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- Jindal Steel & Power Ltd - India
- South Luzon Thermal Energy Corporation
- SN Aboitiz Power Inc, Philippines
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Java Power - Indonesia
- Latin American Coal - Colombia
- Cement Manufacturers Association - India
- Ambuja Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- ICICI Bank Limited - India
- Kapuas Tunggal Persada - Indonesia
- Power Finance Corporation Ltd., India
- Eastern Energy - Thailand
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- Deloitte Consulting - India
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Marubeni Corporation - India
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- Trasteel International SA, Italy
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
- Indian Energy Exchange, India
- Altura Mining Limited, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement PLC, Thailand
- Timah Investasi Mineral - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Rashtriya Ispat Nigam Limited - India
- Tata Chemicals Ltd - India
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- ASAPP Information Group - India
- Electricity Generating Authority of Thailand
- Kaltim Prima Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Interocean Group of Companies - India
- Jaiprakash Power Ventures ltd
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- Jorong Barutama Greston.PT - Indonesia
- Bharathi Cement Corporation - India
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