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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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Sunday, 21 February 21
ANZ DIVESTING FROM THE WORLD’S LARGEST COAL EXPORT PORT IS 'PRAGMATISM' - IEEFA
The biggest buyers of Australian thermal coal have committed to net-zero emissions
ANZ, Australia’s third largest bank, has decided to s ...
Sunday, 21 February 21
EDITORIAL: TIME FOR BANGLADESH TO FOCUS ON RENEWABLE ENERGY, NOT COAL - DHAKA TRIBUNE
Shifting away from coal is not only desirable, but absolutely necessary in these times.
In spite of being detrimental to environment ...
Wednesday, 17 February 21
STRANDED ASSETS A LONG-TERM RISK FOR MAJOR FOSSIL FUEL EXPORTERS - FITCH RATINGS
Fossil exporters face a loss of GDP, government revenue and export receipts from the transition to a lower-carbon economy over the coming decades. ...
Friday, 12 February 21
U.S: WIND SURPASSED COAL AS NO. 1 FUEL SOURCE IN 2020 FOR SOUTHWEST POWER POOL - IEEFA
Wind energy growth due to geography, design factors, and new installations
Wind surpassed coal as the primary power generation sourc ...
Wednesday, 10 February 21
FY21 COAL DEMAND MAY BE LOWER THAN PREVIOUSLY ESTIMATED DUE TO COVID-19: PRALHAD JOSHI - PTI
Coal demand in the current fiscal may be lower than the initial estimate of 1,085 million tonnes (MT) due to the impact of COVID-19, Parliament was ...
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- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- ASAPP Information Group - India
- Manunggal Multi Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- Romanian Commodities Exchange
- ICICI Bank Limited - India
- Indian Energy Exchange, India
- PowerSource Philippines DevCo
- Savvy Resources Ltd - HongKong
- Barasentosa Lestari - Indonesia
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- Coastal Gujarat Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- Central Java Power - Indonesia
- Bhushan Steel Limited - India
- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- SMG Consultants - Indonesia
- Simpson Spence & Young - Indonesia
- The Treasury - Australian Government
- Oldendorff Carriers - Singapore
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Neyveli Lignite Corporation Ltd, - India
- Trasteel International SA, Italy
- Thai Mozambique Logistica
- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- Standard Chartered Bank - UAE
- Indika Energy - Indonesia
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- PTC India Limited - India
- Videocon Industries ltd - India
- Power Finance Corporation Ltd., India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Wilmar Investment Holdings
- CIMB Investment Bank - Malaysia
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- Kumho Petrochemical, South Korea
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- Goldman Sachs - Singapore
- Kideco Jaya Agung - Indonesia
- Bangladesh Power Developement Board
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- Anglo American - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- GN Power Mariveles Coal Plant, Philippines
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- The State Trading Corporation of India Ltd
- Uttam Galva Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- Cement Manufacturers Association - India
- Edison Trading Spa - Italy
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Georgia Ports Authority, United States
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bharathi Cement Corporation - India
- Bayan Resources Tbk. - Indonesia
- Indo Tambangraya Megah - Indonesia
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- Malabar Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Binh Thuan Hamico - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- Coalindo Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- Ministry of Mines - Canada
- Bukit Makmur.PT - Indonesia
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- Madhucon Powers Ltd - India
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- India Bulls Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- Eastern Energy - Thailand
- MS Steel International - UAE
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- Mjunction Services Limited - India
- Maheswari Brothers Coal Limited - India
- The University of Queensland
- Vizag Seaport Private Limited - India
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Bulk Trading Sa - Switzerland
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- Central Electricity Authority - India
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- Mercuria Energy - Indonesia
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Planning Commission, India
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Agrawal Coal Company - India
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Bukit Baiduri Energy - Indonesia
- London Commodity Brokers - England
- Siam City Cement PLC, Thailand
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Kepco SPC Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- Semirara Mining Corp, Philippines
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Globalindo Alam Lestari - Indonesia
- Deloitte Consulting - India
- Eastern Coal Council - USA
- Karbindo Abesyapradhi - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Chamber of Mines of South Africa
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- Independent Power Producers Association of India
- Minerals Council of Australia
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Tata Chemicals Ltd - India
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