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