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