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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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Wednesday, 16 December 20
INDONESIAN COAL RECOVERING - FITCH
Commenting on Indonesian coal, Fitch Ratings, the Indonesian 4,200 kcal index has begun to recover, improving to over USD 29 in November compared t ...
Tuesday, 15 December 20
NEWCASTLE PRICES RECOVER - FITCH
Prices for the benchmark Newcastle 6,000 kcal/kg grade coal have rebounded to over USD 70/tonne since late November as major Asian economies ease l ...
Tuesday, 15 December 20
APAC COAL PRICES REBOUND ON IMPROVED DEMAND AND SUPPLY CUTS - FITCH RATINGS
Prices for the benchmark Newcastle 6,000kcal/kg grade coal have rebounded to over USD70/tonne since late November as major Asian economies ease loc ...
Tuesday, 15 December 20
CHINA EXTENDS FULL OPEN GESTURE TO IMPORTED COAL EXCEPT FOR AUSTRALIA - GLOBAL TIMES
Domestic, overseas suppliers will take up share with easier clearance
China's top economic planner on Saturday gave approval to ...
Monday, 14 December 20
PHILIPPINE BANK RCBC TO STOP LENDING FOR NEW COAL-FIRED POWER PROJECTS - MANILA BULLETIN
Yuchengco-led Rizal Commercial Banking Corporation (RCBC) has forthrightly declared that it will no longer extend financing to new coal-fired power ...
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- Alfred C Toepfer International GmbH - Germany
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- Central Java Power - Indonesia
- LBH Netherlands Bv - Netherlands
- Banpu Public Company Limited - Thailand
- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
- Attock Cement Pakistan Limited
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Mintek Dendrill Indonesia
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- Parry Sugars Refinery, India
- Marubeni Corporation - India
- SMG Consultants - Indonesia
- Ministry of Transport, Egypt
- Standard Chartered Bank - UAE
- Petrochimia International Co. Ltd.- Taiwan
- VISA Power Limited - India
- Bulk Trading Sa - Switzerland
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
- Electricity Authority, New Zealand
- Medco Energi Mining Internasional
- Karaikal Port Pvt Ltd - India
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Kaltim Prima Coal - Indonesia
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- Vizag Seaport Private Limited - India
- Kumho Petrochemical, South Korea
- Kobexindo Tractors - Indoneisa
- Wood Mackenzie - Singapore
- Australian Coal Association
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Dalmia Cement Bharat India
- CIMB Investment Bank - Malaysia
- The State Trading Corporation of India Ltd
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Mjunction Services Limited - India
- Price Waterhouse Coopers - Russia
- Manunggal Multi Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Independent Power Producers Association of India
- Gujarat Mineral Development Corp Ltd - India
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- Samtan Co., Ltd - South Korea
- Makarim & Taira - Indonesia
- Agrawal Coal Company - India
- Meenaskhi Energy Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Indian Oil Corporation Limited
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Deloitte Consulting - India
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Sical Logistics Limited - India
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Essar Steel Hazira Ltd - India
- SMC Global Power, Philippines
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Thiess Contractors Indonesia
- Intertek Mineral Services - Indonesia
- Orica Australia Pty. Ltd.
- Latin American Coal - Colombia
- The University of Queensland
- Commonwealth Bank - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- Sakthi Sugars Limited - India
- Aboitiz Power Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Energy Development Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Planning Commission, India
- Oldendorff Carriers - Singapore
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- IEA Clean Coal Centre - UK
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Carbofer General Trading SA - India
- San Jose City I Power Corp, Philippines
- Metalloyd Limited - United Kingdom
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Renaissance Capital - South Africa
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- Xindia Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Grasim Industreis Ltd - India
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- Anglo American - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- Trasteel International SA, Italy
- Leighton Contractors Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coastal Gujarat Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- Sinarmas Energy and Mining - Indonesia
- Economic Council, Georgia
- Aditya Birla Group - India
- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- Bhushan Steel Limited - India
- Sindya Power Generating Company Private Ltd
- Sarangani Energy Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kepco SPC Power Corporation, Philippines
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Bhatia International Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Ministry of Mines - Canada
- PTC India Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Minerals Council of Australia
- Singapore Mercantile Exchange
- Parliament of New Zealand
- McConnell Dowell - Australia
- Australian Commodity Traders Exchange
- ASAPP Information Group - India
- CNBM International Corporation - China
- Indika Energy - Indonesia
- Altura Mining Limited, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- White Energy Company Limited
- Jaiprakash Power Ventures ltd
- Global Coal Blending Company Limited - Australia
- Siam City Cement PLC, Thailand
- Goldman Sachs - Singapore
- Formosa Plastics Group - Taiwan
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