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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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Tuesday, 02 January 24
COAL TRADE CONTINUES TO HEAD EAST - BALTIC EXCHANGE
The global coal trade, once concentrated in the Pacific and Atlantic basins, is undergoing a significant transformation, as highlighted in the Inte ...
Tuesday, 02 January 24
COAL CARGOES: AVOIDING EXPLOSION AND SELF-HEATING - GARD
KNOWLEDGE TO ELEVATE
Despite its contribution to greenhouse gas emissions, global coal consumption climbed to an all-time high in 2022 and is ...
Tuesday, 02 January 24
SINOPEC FORECASTS CHINA’S COAL CONSUMPTION TO PEAK AROUND 2025 - REUTERS
China Petrochemical Corp, or Sinopec, expects coal consumption to peak around 2025 at 4.37 billion metric tons, the state energy group said in an o ...
Thursday, 07 December 23
CHINA TO SET UP COAL PRODUCTION RESERVE TO STABILISE PRICES - REUTERS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
Friday, 01 December 23
COAL MINERS GROUP EXPECTS INDONESIA’S 2023 COAL OUTPUT TO SURPASS TARGET - REUTERS
The Indonesian Coal Mining Association (ICMA) expects the country’s 2023 coal output to surpass the official target of 695 million metric ton ...
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- Miang Besar Coal Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- Central Electricity Authority - India
- GMR Energy Limited - India
- Global Green Power PLC Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Anglo American - United Kingdom
- Singapore Mercantile Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- Baramulti Group, Indonesia
- Planning Commission, India
- Australian Commodity Traders Exchange
- White Energy Company Limited
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Romanian Commodities Exchange
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- Sree Jayajothi Cements Limited - India
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Posco Energy - South Korea
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- PowerSource Philippines DevCo
- SMG Consultants - Indonesia
- McConnell Dowell - Australia
- Kalimantan Lumbung Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- Jindal Steel & Power Ltd - India
- Kartika Selabumi Mining - Indonesia
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- Thai Mozambique Logistica
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Indonesian Coal Mining Association
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Bukit Makmur.PT - Indonesia
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Finance - Indonesia
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- VISA Power Limited - India
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Parliament of New Zealand
- Madhucon Powers Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mintek Dendrill Indonesia
- Vedanta Resources Plc - India
- Ind-Barath Power Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Borneo Indobara - Indonesia
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- Leighton Contractors Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Kideco Jaya Agung - Indonesia
- Timah Investasi Mineral - Indoneisa
- Karaikal Port Pvt Ltd - India
- Eastern Energy - Thailand
- Kapuas Tunggal Persada - Indonesia
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- SMC Global Power, Philippines
- Eastern Coal Council - USA
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- Africa Commodities Group - South Africa
- Chettinad Cement Corporation Ltd - India
- Deloitte Consulting - India
- Coal and Oil Company - UAE
- The University of Queensland
- Toyota Tsusho Corporation, Japan
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- Medco Energi Mining Internasional
- Electricity Authority, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- Economic Council, Georgia
- Renaissance Capital - South Africa
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- Sojitz Corporation - Japan
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- Bhoruka Overseas - Indonesia
- Wood Mackenzie - Singapore
- Ceylon Electricity Board - Sri Lanka
- MS Steel International - UAE
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhushan Steel Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Heidelberg Cement - Germany
- Energy Link Ltd, New Zealand
- Altura Mining Limited, Indonesia
- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- South Luzon Thermal Energy Corporation
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Semirara Mining Corp, Philippines
- Dalmia Cement Bharat India
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Ministry of Transport, Egypt
- Semirara Mining and Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Tamil Nadu electricity Board
- Edison Trading Spa - Italy
- Larsen & Toubro Limited - India
- Sical Logistics Limited - India
- Wilmar Investment Holdings
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Cement Manufacturers Association - India
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Sakthi Sugars Limited - India
- Latin American Coal - Colombia
- Therma Luzon, Inc, Philippines
- Mercator Lines Limited - India
- Antam Resourcindo - Indonesia
- Orica Mining Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Mercuria Energy - Indonesia
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Merrill Lynch Commodities Europe
- Kaltim Prima Coal - Indonesia
- GVK Power & Infra Limited - India
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
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