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