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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, 22 December 20
SOUTHEAST ASIA'S COAL DEMAND IS SET TO EXPAND AFTER THE PANDEMIC-INDUCED HIATUS IN 2020 - IEA
Coal consumption in Southeast Asia has more than doubled in the last decade, with the largest growth in Indonesia and Viet Nam, followed by Malaysi ...
Tuesday, 22 December 20
COAL DEMAND IS RISING QUICKLY IN PAKISTAN AND MORE SLOWLY IN BANGLADESH - IEA
Pakistan had 150 MW of installed coal power capacity in 2015. Since 2017, in addition to a few small plants for industry, Pakistan has commissioned ...
Tuesday, 22 December 20
AFRICA PERSPECTIVE INDICATES NO MAJOR SHIFTS FOR COAL CONSUMPTION - IEA
Overall countries on the African continent consumed 197 Mt of coal in 2019, 12 Mt less (-6%) than 2018.
South Africa, the continent& ...
Monday, 21 December 20
COAL PRICES WITHSTAND DESPITE COVID-19 AND CHINESE IMPORT QUOTAS - IEA
Coal prices vary by region as well as by grade and quality. The price rebound starting in 2016 ended in 2018, moving in a downward trend in 2019. A ...
Monday, 21 December 20
COAL'S PARTIAL RECOVERY IS SET TO FADE AFTER 2021 - IEA
Global coal consumption is estimated to have fallen by 7%, or over 500 million tonnes, between 2018 in 2020. A decline of this size over a two-year ...
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- Ministry of Transport, Egypt
- GMR Energy Limited - India
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- Global Coal Blending Company Limited - Australia
- Bhatia International Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- New Zealand Coal & Carbon
- Kepco SPC Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Vedanta Resources Plc - India
- Uttam Galva Steels Limited - India
- Oldendorff Carriers - Singapore
- Chamber of Mines of South Africa
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- Coalindo Energy - Indonesia
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- Gujarat Sidhee Cement - India
- Bhushan Steel Limited - India
- Videocon Industries ltd - India
- Kartika Selabumi Mining - Indonesia
- Commonwealth Bank - Australia
- Bukit Baiduri Energy - Indonesia
- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Binh Thuan Hamico - Vietnam
- Samtan Co., Ltd - South Korea
- Jindal Steel & Power Ltd - India
- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- Indogreen Group - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Standard Chartered Bank - UAE
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
- The State Trading Corporation of India Ltd
- Economic Council, Georgia
- Star Paper Mills Limited - India
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- PetroVietnam Power Coal Import and Supply Company
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Mintek Dendrill Indonesia
- Indonesian Coal Mining Association
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- CNBM International Corporation - China
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- The University of Queensland
- Merrill Lynch Commodities Europe
- Bukit Makmur.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- PNOC Exploration Corporation - Philippines
- Meralco Power Generation, Philippines
- Carbofer General Trading SA - India
- Xindia Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- Deloitte Consulting - India
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- SN Aboitiz Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- Attock Cement Pakistan Limited
- Central Electricity Authority - India
- Agrawal Coal Company - India
- Baramulti Group, Indonesia
- White Energy Company Limited
- Parliament of New Zealand
- Medco Energi Mining Internasional
- Electricity Generating Authority of Thailand
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Indika Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Heidelberg Cement - Germany
- VISA Power Limited - India
- Meenaskhi Energy Private Limited - India
- Malabar Cements Ltd - India
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Trasteel International SA, Italy
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- Rio Tinto Coal - Australia
- Georgia Ports Authority, United States
- Edison Trading Spa - Italy
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- Tata Chemicals Ltd - India
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
- Africa Commodities Group - South Africa
- GN Power Mariveles Coal Plant, Philippines
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Minerals Council of Australia
- Globalindo Alam Lestari - Indonesia
- Romanian Commodities Exchange
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- Orica Mining Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
- Global Green Power PLC Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Wilmar Investment Holdings
- Essar Steel Hazira Ltd - India
- South Luzon Thermal Energy Corporation
- Mercator Lines Limited - India
- Latin American Coal - Colombia
- Grasim Industreis Ltd - India
- Wood Mackenzie - Singapore
- Sical Logistics Limited - India
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kideco Jaya Agung - Indonesia
- Maheswari Brothers Coal Limited - India
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Energy Link Ltd, New Zealand
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- CIMB Investment Bank - Malaysia
- Barasentosa Lestari - Indonesia
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