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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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Thursday, 17 December 20
BUMA SIGNED US$1.0 BILLION WORTH OF EXTENSION CONTRACT WITH BERAU COAL
PT Bukit Makmur Mandiri Utama, subsidiary of PT Delta Dunia Makmur Tbk., has extended its mining services contracts with PT Berau Coal, in relation ...
Wednesday, 16 December 20
INDONESIA 2020 COAL CONSUMPTION ESTIMATED AT 140-145 MLN TONNES - OFFICIAL, REUTERS REPORTED
Indonesia’s domestic coal consumption is estimated at 140-145 million tonnes this year, Dodik Ariyanto, an official at the energy ministry, t ...
Wednesday, 16 December 20
RUSSIA REVISES DOWN EXPORT EXPECTATION - FITCH
The Ministry of Economy of Russia, the world’s third largest thermal coal exporting country, released its annual forecasts ...
Wednesday, 16 December 20
INDIAN COAL IMPORTS TO REMAIN SUBDUED - FITCH RATINGS
Fitch Rating commented on Indian Coal Imports, Fitch said, coal imports by Indian utilities fell by about 24% yoy to 44 million tonnes (mt) i ...
Wednesday, 16 December 20
CHINA TO BOOST DOMESTIC SUPPLY - FITCH
China’s benchmark Qinhuangdao 5,500kcal/kg coal price rose above the government’s upper yellow interval of CNY600/tonne in early Octobe ...
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- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- GVK Power & Infra Limited - India
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- Globalindo Alam Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Port Waratah Coal Services - Australia
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- Kobexindo Tractors - Indoneisa
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- Merrill Lynch Commodities Europe
- Australian Coal Association
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- Vedanta Resources Plc - India
- International Coal Ventures Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Coalindo Energy - Indonesia
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- AsiaOL BioFuels Corp., Philippines
- CNBM International Corporation - China
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Formosa Plastics Group - Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- Dalmia Cement Bharat India
- Makarim & Taira - Indonesia
- SN Aboitiz Power Inc, Philippines
- Trasteel International SA, Italy
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- Bangladesh Power Developement Board
- Sree Jayajothi Cements Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Goldman Sachs - Singapore
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- Carbofer General Trading SA - India
- Siam City Cement PLC, Thailand
- Planning Commission, India
- Bukit Asam (Persero) Tbk - Indonesia
- Georgia Ports Authority, United States
- Toyota Tsusho Corporation, Japan
- San Jose City I Power Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Attock Cement Pakistan Limited
- Larsen & Toubro Limited - India
- Timah Investasi Mineral - Indoneisa
- Jindal Steel & Power Ltd - India
- IEA Clean Coal Centre - UK
- Maharashtra Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Antam Resourcindo - Indonesia
- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Banpu Public Company Limited - Thailand
- Singapore Mercantile Exchange
- ICICI Bank Limited - India
- India Bulls Power Limited - India
- Mintek Dendrill Indonesia
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- Marubeni Corporation - India
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- Madhucon Powers Ltd - India
- Metalloyd Limited - United Kingdom
- Indika Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Electricity Generating Authority of Thailand
- Uttam Galva Steels Limited - India
- Energy Link Ltd, New Zealand
- Mjunction Services Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Renaissance Capital - South Africa
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- Gujarat Sidhee Cement - India
- Anglo American - United Kingdom
- The Treasury - Australian Government
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- White Energy Company Limited
- VISA Power Limited - India
- Indonesian Coal Mining Association
- Bhoruka Overseas - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coastal Gujarat Power Limited - India
- Directorate Of Revenue Intelligence - India
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- Parliament of New Zealand
- Electricity Authority, New Zealand
- SMC Global Power, Philippines
- Ministry of Transport, Egypt
- Global Coal Blending Company Limited - Australia
- Bharathi Cement Corporation - India
- The University of Queensland
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- Romanian Commodities Exchange
- Karbindo Abesyapradhi - Indoneisa
- Bhatia International Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Latin American Coal - Colombia
- Ambuja Cements Ltd - India
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Price Waterhouse Coopers - Russia
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Xindia Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Bayan Resources Tbk. - Indonesia
- TeaM Sual Corporation - Philippines
- Deloitte Consulting - India
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- Indian Energy Exchange, India
- Kartika Selabumi Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- Tamil Nadu electricity Board
- Global Green Power PLC Corporation, Philippines
- PTC India Limited - India
- Malabar Cements Ltd - India
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- Chamber of Mines of South Africa
- Sindya Power Generating Company Private Ltd
- MS Steel International - UAE
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
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