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