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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, 26 August 20
ASIAN COAL PRICES LIKELY TO REMAIN DEPRESSED SAY TRADERS, ANALYSTS - REUTERS
Asian coal prices, which have fallen around 25% this year as power demand slumped due to the coronavirus outbreak, are unlikely to move higher befo ...
Wednesday, 26 August 20
WORLD COAL EXPORTS: INDONESIAN THERMAL COAL EXPORTS HAVE COME UNDER PRESSURE AS THERMAL COAL PRICES WEAKEN - REPORT
Indonesia’s exports to decline sharply from record highs
Indonesia is the world’s largest thermal coal exporter, sellin ...
Wednesday, 26 August 20
JAPAN'S COAL IMPORTS ARE BEING AFFECTED BY COMPETING INFLUENCES - REPORT
Japan is the world’s third largest thermal coal importer, importing an estimated 135 million tonnes of thermal coal in 2019. The country&rsqu ...
Wednesday, 26 August 20
PENDING SOUTH KOREA LEGISLATION COULD FORCE HALT TO COUNTRY’S COAL PLANT EXPORT DEALS - KOREA ECONOMIC DAILY
South Korea’s parliament looks set to pass new legislation to ban financing on foreign coal power projects, putting all overseas coal-fired p ...
Tuesday, 25 August 20
INDIA'S IMPORTS FALL AS LOCKDOWNS IMPACT THE POWER AND INDUSTRIAL SECTORS - REPORT
India is the world’s second largest thermal coal consumer and importer, importing an estimated 211 million tonnes of thermal coal in 2019.&nb ...
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- Global Green Power PLC Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Minerals Council of Australia
- Central Electricity Authority - India
- Alfred C Toepfer International GmbH - Germany
- Independent Power Producers Association of India
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Energy Link Ltd, New Zealand
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Georgia Ports Authority, United States
- Bukit Asam (Persero) Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- Banpu Public Company Limited - Thailand
- India Bulls Power Limited - India
- Coalindo Energy - Indonesia
- Barasentosa Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- Bhatia International Limited - India
- Mjunction Services Limited - India
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
- Port Waratah Coal Services - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- Bukit Baiduri Energy - Indonesia
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- Kalimantan Lumbung Energi - Indonesia
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Rio Tinto Coal - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercator Lines Limited - India
- Goldman Sachs - Singapore
- Eastern Coal Council - USA
- Africa Commodities Group - South Africa
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Electricity Authority, New Zealand
- CIMB Investment Bank - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- New Zealand Coal & Carbon
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- Oldendorff Carriers - Singapore
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kobexindo Tractors - Indoneisa
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Sojitz Corporation - Japan
- OPG Power Generation Pvt Ltd - India
- Indian Oil Corporation Limited
- Heidelberg Cement - Germany
- PTC India Limited - India
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Ind-Barath Power Infra Limited - India
- Gujarat Sidhee Cement - India
- PNOC Exploration Corporation - Philippines
- Ministry of Finance - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- ASAPP Information Group - India
- Siam City Cement - Thailand
- MS Steel International - UAE
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- Australian Coal Association
- Altura Mining Limited, Indonesia
- Indo Tambangraya Megah - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- Jindal Steel & Power Ltd - India
- Baramulti Group, Indonesia
- Therma Luzon, Inc, Philippines
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- Cement Manufacturers Association - India
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- Bulk Trading Sa - Switzerland
- San Jose City I Power Corp, Philippines
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Mintek Dendrill Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- Carbofer General Trading SA - India
- CNBM International Corporation - China
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- Standard Chartered Bank - UAE
- SN Aboitiz Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- Semirara Mining Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- Posco Energy - South Korea
- Mercuria Energy - Indonesia
- Antam Resourcindo - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
- Madhucon Powers Ltd - India
- Global Coal Blending Company Limited - Australia
- Romanian Commodities Exchange
- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- ICICI Bank Limited - India
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- PetroVietnam Power Coal Import and Supply Company
- Edison Trading Spa - Italy
- Straits Asia Resources Limited - Singapore
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- Attock Cement Pakistan Limited
- McConnell Dowell - Australia
- Vedanta Resources Plc - India
- Global Business Power Corporation, Philippines
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Aboitiz Power Corporation - Philippines
- Merrill Lynch Commodities Europe
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- Parliament of New Zealand
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- TeaM Sual Corporation - Philippines
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
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