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