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