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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, 24 November 23
COAL IMPORTS TO INDIA IN OCTOBER 2023 REACHED HIGHEST LEVELS IN NEARLY A YEAR AND A HALF - VESSELSVALUE, VESON NAUTICAL
In October, coal imports to India reached 13.8 mt in October 2023, according to Oceanbolt, a Veson Nautical solution, the highest level since May 2 ...
Friday, 24 November 23
COAL SHIPMENTS TO ADVANCED ECONOMIES DOWN 17% SO FAR IN 2023 - BIMCO
In the first ten months of 2023, coal shipments to advanced economies fell by 17% y/y, as demand for electricity declined and the share of electric ...
Friday, 24 November 23
INTELLIGENT COAL MINES CONTRIBUTE TO IMPROVING SAFETY STANDARDS - CHINA DAILY
Mechanization, automation and intelligent upgrades have contributed to improved safety in coal mines, though the level of development of intelligen ...
Friday, 24 November 23
WHY AUSTRALIA'S COAL MINES ARE GETTING BIGGER - IEEFA
Australia’s largest coal mines are getting larger. Mines in New South Wales (NSW) are ramping up production following the state’s recov ...
Wednesday, 22 November 23
INDIA: GOVERNMENT PLANS 1.4 BILLION TONNE COAL OUTPUT BY 2027 - LIVEMINT
The Union coal ministry on Monday announced plans to increase India’s coal production to 1.404 billion tonne by 2027, with an eye to further ...
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- Dalmia Cement Bharat India
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- GVK Power & Infra Limited - India
- Minerals Council of Australia
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Iligan Light & Power Inc, Philippines
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
- Parry Sugars Refinery, India
- Indo Tambangraya Megah - Indonesia
- Global Business Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- Indian Energy Exchange, India
- Trasteel International SA, Italy
- Gujarat Sidhee Cement - India
- Energy Development Corp, Philippines
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- The State Trading Corporation of India Ltd
- San Jose City I Power Corp, Philippines
- Wood Mackenzie - Singapore
- Economic Council, Georgia
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- Planning Commission, India
- Bharathi Cement Corporation - India
- Parliament of New Zealand
- Simpson Spence & Young - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- Heidelberg Cement - Germany
- Indika Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining Corp, Philippines
- Anglo American - United Kingdom
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Agrawal Coal Company - India
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Aboitiz Power Corporation - Philippines
- Bhatia International Limited - India
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- Africa Commodities Group - South Africa
- Asmin Koalindo Tuhup - Indonesia
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- GAC Shipping (India) Pvt Ltd
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- Ministry of Finance - Indonesia
- Chamber of Mines of South Africa
- Australian Commodity Traders Exchange
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Standard Chartered Bank - UAE
- LBH Netherlands Bv - Netherlands
- Chettinad Cement Corporation Ltd - India
- Siam City Cement PLC, Thailand
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Singapore Mercantile Exchange
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Salva Resources Pvt Ltd - India
- Borneo Indobara - Indonesia
- Petron Corporation, Philippines
- Altura Mining Limited, Indonesia
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Mintek Dendrill Indonesia
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Attock Cement Pakistan Limited
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- India Bulls Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- Eastern Energy - Thailand
- Rashtriya Ispat Nigam Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Romanian Commodities Exchange
- ICICI Bank Limited - India
- VISA Power Limited - India
- Medco Energi Mining Internasional
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- MS Steel International - UAE
- Videocon Industries ltd - India
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- Karaikal Port Pvt Ltd - India
- Rio Tinto Coal - Australia
- Miang Besar Coal Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Jaiprakash Power Ventures ltd
- Formosa Plastics Group - Taiwan
- Electricity Generating Authority of Thailand
- Uttam Galva Steels Limited - India
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Banpu Public Company Limited - Thailand
- Kartika Selabumi Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- Power Finance Corporation Ltd., India
- Kepco SPC Power Corporation, Philippines
- Posco Energy - South Korea
- Semirara Mining and Power Corporation, Philippines
- Deloitte Consulting - India
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- Orica Australia Pty. Ltd.
- Gujarat Mineral Development Corp Ltd - India
- Sindya Power Generating Company Private Ltd
- Latin American Coal - Colombia
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kapuas Tunggal Persada - Indonesia
- Goldman Sachs - Singapore
- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Tamil Nadu electricity Board
- Kaltim Prima Coal - Indonesia
- Electricity Authority, New Zealand
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