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