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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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Friday, 15 January 21
OVER US$50 BILLION IN GAS POWER PROJECTS AND LNG IMPORT FACILITIES AT RISK OF CANCELLATION IN BANGLADESH, PAKISTAN AND VIETNAM - IEEFA
Pakistan and Bangladesh have already cancelled tenders for LNG imports
Emerging markets such as Vietnam, Pakistan and Bangladesh tha ...
Friday, 15 January 21
VIETNAM'S EXTRAORDINARY ROOFTOP SOLAR SUCCESS DEALS ANOTHER BLOW TO THE REMAINING COAL PIPELINE - IEEFA
9.3 gigawatts peak of solar capacity, equal to 6 coal power plants, installed in less than a year
Vietnam’s solar power indust ...
Friday, 15 January 21
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 14 January 21
KOREA MIDLAND POWER INVITED BIDS FOR AUSTRALIAN COAL FOR THREE YEARS SUPPLY
COALspot.com: Korea Midland Power Co. Ltd, issued an International tender for total 1,560,000 MT of Min.5,700 kcal/kg NCV coal of Australian Origin ...
Wednesday, 13 January 21
CHINA THERMAL GENCO PROFITS FACE PRESSURE AMID POWER SHORTAGES - FITHCH WIRE
High coal and gas prices will put near-term pressure on margins for thermal power generators in China, says Fitch Ratings. However, the power short ...
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- ICICI Bank Limited - India
- Karbindo Abesyapradhi - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Grasim Industreis Ltd - India
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Toyota Tsusho Corporation, Japan
- Straits Asia Resources Limited - Singapore
- Jindal Steel & Power Ltd - India
- Central Java Power - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asmin Koalindo Tuhup - Indonesia
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Ind-Barath Power Infra Limited - India
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- ASAPP Information Group - India
- London Commodity Brokers - England
- Jorong Barutama Greston.PT - Indonesia
- CNBM International Corporation - China
- Lanco Infratech Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- Bangladesh Power Developement Board
- Alfred C Toepfer International GmbH - Germany
- European Bulk Services B.V. - Netherlands
- Sakthi Sugars Limited - India
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- CIMB Investment Bank - Malaysia
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Jaiprakash Power Ventures ltd
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Bukit Asam (Persero) Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Posco Energy - South Korea
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- Indian Oil Corporation Limited
- Meralco Power Generation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Mines - Canada
- Bayan Resources Tbk. - Indonesia
- Trasteel International SA, Italy
- Banpu Public Company Limited - Thailand
- Rio Tinto Coal - Australia
- Larsen & Toubro Limited - India
- Edison Trading Spa - Italy
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- TeaM Sual Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- Bharathi Cement Corporation - India
- Wilmar Investment Holdings
- Dalmia Cement Bharat India
- Bulk Trading Sa - Switzerland
- VISA Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- New Zealand Coal & Carbon
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Agrawal Coal Company - India
- Miang Besar Coal Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- GMR Energy Limited - India
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Siam City Cement - Thailand
- Australian Coal Association
- Parliament of New Zealand
- Binh Thuan Hamico - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- SMG Consultants - Indonesia
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Romanian Commodities Exchange
- Sindya Power Generating Company Private Ltd
- Kepco SPC Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Meenaskhi Energy Private Limited - India
- Altura Mining Limited, Indonesia
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- Eastern Energy - Thailand
- Electricity Authority, New Zealand
- Indika Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Gujarat Sidhee Cement - India
- Eastern Coal Council - USA
- Gujarat Mineral Development Corp Ltd - India
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- Planning Commission, India
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- Ambuja Cements Ltd - India
- Sojitz Corporation - Japan
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- Attock Cement Pakistan Limited
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- Singapore Mercantile Exchange
- Indian Energy Exchange, India
- Africa Commodities Group - South Africa
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Chamber of Mines of South Africa
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- Pipit Mutiara Jaya. PT, Indonesia
- Power Finance Corporation Ltd., India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- IEA Clean Coal Centre - UK
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Energy Development Corp, Philippines
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhatia International Limited - India
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- Xindia Steels Limited - India
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
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