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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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Saturday, 05 September 20
INDIA WON'T KICK ITS COAL HABIT SO EASILY - HINDU BUSINESS LINE
India has traditionally considered itself lucky to have been endowed with abundant coal reserves, which it has sought to use to meet its energy nee ...
Saturday, 05 September 20
FINANCING COMPLETE FOR 900MW FIFTH PHASE OF MASSIVE DUBAI SOLAR PARK: ARABIAN BUSINESS
Saudi-based ACWA Power on Thursday announced it has completed the signing of all financing agreements for the fifth phase of the Mohammed bin Rashi ...
Saturday, 05 September 20
POLISH COAL DEMAND EXPECTED TO FALL BY 7 MLN TONNES NEXT YEAR: MINISTER - REUTERS
Poland’s demand for coal is expected to fall by around 7 million tonnes next year, or more than 10% of annual hard coal production, after a d ...
Saturday, 05 September 20
PAKISTAN'S NEW 27-YEAR POWER PLAN RISKS LOCKING IN LONG-TERM OVERCAPACITY, LEAVING IMPORTED COAL AND LNG PLANTS STRANDED - IEEFA
Wind and solar, the country’s cheapest source of new generation, also overlooked
Pakistan risks locking itself into building m ...
Friday, 04 September 20
IN A DEEPENING DEBT HOLE OF $34 BILLION, INDONESIA’S PLN MUST STOP DIGGING - IEEFA
The utility has added IDR100 trillion in debt annually for the last five years
Utilities globally started changing the way they do business ye ...
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- Vedanta Resources Plc - India
- Coalindo Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- Tamil Nadu electricity Board
- Kideco Jaya Agung - Indonesia
- CIMB Investment Bank - Malaysia
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Aditya Birla Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Tata Chemicals Ltd - India
- Pendopo Energi Batubara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- South Luzon Thermal Energy Corporation
- Ministry of Mines - Canada
- Price Waterhouse Coopers - Russia
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- San Jose City I Power Corp, Philippines
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Mjunction Services Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- TeaM Sual Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Baramulti Group, Indonesia
- Port Waratah Coal Services - Australia
- Siam City Cement - Thailand
- Electricity Authority, New Zealand
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- Anglo American - United Kingdom
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- Rashtriya Ispat Nigam Limited - India
- PNOC Exploration Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- White Energy Company Limited
- McConnell Dowell - Australia
- Kepco SPC Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- LBH Netherlands Bv - Netherlands
- New Zealand Coal & Carbon
- MS Steel International - UAE
- Bulk Trading Sa - Switzerland
- Interocean Group of Companies - India
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- Meralco Power Generation, Philippines
- Central Java Power - Indonesia
- Semirara Mining Corp, Philippines
- Wilmar Investment Holdings
- ASAPP Information Group - India
- Central Electricity Authority - India
- Kalimantan Lumbung Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Indian Energy Exchange, India
- Sojitz Corporation - Japan
- Independent Power Producers Association of India
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- Renaissance Capital - South Africa
- Deloitte Consulting - India
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Riau Bara Harum - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Global Green Power PLC Corporation, Philippines
- Eastern Coal Council - USA
- Agrawal Coal Company - India
- Merrill Lynch Commodities Europe
- Sree Jayajothi Cements Limited - India
- Indonesian Coal Mining Association
- London Commodity Brokers - England
- IEA Clean Coal Centre - UK
- Bangladesh Power Developement Board
- Bhushan Steel Limited - India
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- ICICI Bank Limited - India
- Intertek Mineral Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- Holcim Trading Pte Ltd - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Romanian Commodities Exchange
- Bharathi Cement Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Uttam Galva Steels Limited - India
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Bhoruka Overseas - Indonesia
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Ambuja Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- The Treasury - Australian Government
- Asmin Koalindo Tuhup - Indonesia
- The State Trading Corporation of India Ltd
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Mercuria Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Barasentosa Lestari - Indonesia
- Australian Coal Association
- Electricity Generating Authority of Thailand
- Kohat Cement Company Ltd. - Pakistan
- Bukit Asam (Persero) Tbk - Indonesia
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Oldendorff Carriers - Singapore
- Thiess Contractors Indonesia
- Sakthi Sugars Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining and Power Corporation, Philippines
- Economic Council, Georgia
- Bahari Cakrawala Sebuku - Indonesia
- Iligan Light & Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- Parry Sugars Refinery, India
- OPG Power Generation Pvt Ltd - India
- Wood Mackenzie - Singapore
- GAC Shipping (India) Pvt Ltd
- Goldman Sachs - Singapore
- The University of Queensland
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- European Bulk Services B.V. - Netherlands
- Cement Manufacturers Association - India
- Minerals Council of Australia
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Leighton Contractors Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- India Bulls Power Limited - India
- PTC India Limited - India
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Therma Luzon, Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- Directorate Of Revenue Intelligence - India
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- Kumho Petrochemical, South Korea
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