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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, 22 November 23
OBLIGATION. INDONESIA AIMS TO START COLLECTING LEVIES FROM COAL MINERS IN JANUARY - REUTERS
Indonesia plans to start collecting levies from coal miners in January to be used to compensate miners who sell coal to the state utility at lower ...
Tuesday, 21 November 23
INDIAN COAL POWER PLANTS’ CAPACITY UTILISATION WILL IMPROVE TO 65% THIS FISCAL: - CRISIL
Coal-based thermal power units’ plant load factor (PLF) or capacity utilisation will improve to 65 percent in the current fiscal year despite ...
Tuesday, 14 November 23
CAPITAL PRODUCT PARTNERS L.P. ANNOUNCES TRANSFORMATIVE TRANSACTION INCLUDING THE ACQUISITION OF 11 NEWBUILD LNG CARRIERS FOR $3.1 BILLION
Capital Product Partners L.P. announced that it has entered into an umbrella agreement (the “Umbrella Agreement”) with Capital Maritime ...
Tuesday, 14 November 23
COAL INDIA BEATS Q2 PROFIT VIEW ON HIGH POWER DEMAND AMID WEAK MONSOON - REUTERS
Coal India on Friday reported better-than-expected second-quarter profit, helped by high power demand and boosted production amid a weak monsoon.
...
Tuesday, 14 November 23
CHINA'S BELT AND ROAD INITIATIVE TURNS AWAY FROM COAL - WOOD MACKENZIE
Ambitious, contentious and big spending, China’s Belt and Road Initiative (BRI) is 10 years old. In that time, China has splashed more than U ...
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- Meenaskhi Energy Private Limited - India
- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- Romanian Commodities Exchange
- PTC India Limited - India
- Semirara Mining Corp, Philippines
- Aditya Birla Group - India
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- Directorate General of MIneral and Coal - Indonesia
- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
- Petrochimia International Co. Ltd.- Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Deloitte Consulting - India
- Tamil Nadu electricity Board
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- PetroVietnam Power Coal Import and Supply Company
- Coal and Oil Company - UAE
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- ICICI Bank Limited - India
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- Gujarat Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- Mintek Dendrill Indonesia
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Australian Coal Association
- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- Borneo Indobara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining and Power Corporation, Philippines
- Chamber of Mines of South Africa
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Orica Australia Pty. Ltd.
- Jorong Barutama Greston.PT - Indonesia
- White Energy Company Limited
- Anglo American - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Indian Oil Corporation Limited
- Ambuja Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- PNOC Exploration Corporation - Philippines
- Bhatia International Limited - India
- Xindia Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- Vedanta Resources Plc - India
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Riau Bara Harum - Indonesia
- Edison Trading Spa - Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- Bulk Trading Sa - Switzerland
- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- Jindal Steel & Power Ltd - India
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- The Treasury - Australian Government
- The University of Queensland
- Renaissance Capital - South Africa
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Eastern Coal Council - USA
- GMR Energy Limited - India
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- MS Steel International - UAE
- AsiaOL BioFuels Corp., Philippines
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Cement Manufacturers Association - India
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- Orica Mining Services - Indonesia
- Standard Chartered Bank - UAE
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- Central Electricity Authority - India
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- India Bulls Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- Straits Asia Resources Limited - Singapore
- Global Green Power PLC Corporation, Philippines
- Dalmia Cement Bharat India
- Indo Tambangraya Megah - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sakthi Sugars Limited - India
- Planning Commission, India
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Chettinad Cement Corporation Ltd - India
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- Videocon Industries ltd - India
- Alfred C Toepfer International GmbH - Germany
- Goldman Sachs - Singapore
- Makarim & Taira - Indonesia
- Wilmar Investment Holdings
- VISA Power Limited - India
- Minerals Council of Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- Ind-Barath Power Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Energy Development Corp, Philippines
- Grasim Industreis Ltd - India
- South Luzon Thermal Energy Corporation
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