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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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Friday, 14 August 20
EIA: COAL PLANTS UNECONOMICAL IN MOST REGIONS - IEEFA
U.S. coal power generation plunged by 30 percent in the first half of 2020 off an already-depressed base, shoved out by natural gas and renewables ...
Thursday, 13 August 20
INDIA SHOULD RECORD A SLIGHT DECREASE IN THERMAL COAL IMPORTS, REACHING A VOLUME OF 167 MILLION TONS BY THE END OF 2020 - ASSOCARBONI
Regarding 2020 thermal coal imports forecasts, Vietnam’s coal imports showed a very strong growth in the first half of 2020 and it is believe ...
Thursday, 13 August 20
INDONESIA REMAINS THE LARGEST EXPORTER OF COAL IN THE WORLD - ASSOCARBONI
According to the last Assocarboni data for 2019, Indonesia remains the largest exporter in the world. Thermal coal exports have in fact reached 456 ...
Wednesday, 12 August 20
VIETNAM WAS THE PROTAGONIST OF A SIGNIFICANT INCREASE IN COAL IMPORTS IN 2019 - ASSOCARBONI
The latest Assocarboni data for 2019 also provide a detailed picture on the trend of the global coal import.
According to Assocarbon ...
Wednesday, 12 August 20
THE COAL MARKET IN ITALY - ASSOCARBONI
Italy, which in 2019 reported a decrease in thermal coal imports, with a volume of 7,5 million tons (-32% compared to 11 million tons in 2018), whi ...
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- Orica Mining Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Wood Mackenzie - Singapore
- Binh Thuan Hamico - Vietnam
- Africa Commodities Group - South Africa
- Formosa Plastics Group - Taiwan
- Meenaskhi Energy Private Limited - India
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- Gujarat Sidhee Cement - India
- Semirara Mining and Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- Planning Commission, India
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coal and Oil Company - UAE
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- Lanco Infratech Ltd - India
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Directorate General of MIneral and Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- Kideco Jaya Agung - Indonesia
- Coastal Gujarat Power Limited - India
- India Bulls Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Savvy Resources Ltd - HongKong
- Straits Asia Resources Limited - Singapore
- Renaissance Capital - South Africa
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- Eastern Coal Council - USA
- Wilmar Investment Holdings
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Global Green Power PLC Corporation, Philippines
- Electricity Generating Authority of Thailand
- Mercuria Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- Sinarmas Energy and Mining - Indonesia
- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- Energy Development Corp, Philippines
- White Energy Company Limited
- Indo Tambangraya Megah - Indonesia
- SMG Consultants - Indonesia
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
- Romanian Commodities Exchange
- Ministry of Transport, Egypt
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Link Ltd, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Chamber of Mines of South Africa
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- Oldendorff Carriers - Singapore
- Ministry of Finance - Indonesia
- LBH Netherlands Bv - Netherlands
- Coalindo Energy - Indonesia
- Goldman Sachs - Singapore
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- Vijayanagar Sugar Pvt Ltd - India
- Makarim & Taira - Indonesia
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bhatia International Limited - India
- Grasim Industreis Ltd - India
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- The Treasury - Australian Government
- Xindia Steels Limited - India
- Eastern Energy - Thailand
- Georgia Ports Authority, United States
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- Madhucon Powers Ltd - India
- Cigading International Bulk Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- IHS Mccloskey Coal Group - USA
- PetroVietnam Power Coal Import and Supply Company
- Ind-Barath Power Infra Limited - India
- Sakthi Sugars Limited - India
- Central Java Power - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Price Waterhouse Coopers - Russia
- Bayan Resources Tbk. - Indonesia
- Latin American Coal - Colombia
- Neyveli Lignite Corporation Ltd, - India
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- Kumho Petrochemical, South Korea
- GAC Shipping (India) Pvt Ltd
- Petron Corporation, Philippines
- ASAPP Information Group - India
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- GVK Power & Infra Limited - India
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Bhoruka Overseas - Indonesia
- San Jose City I Power Corp, Philippines
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- CNBM International Corporation - China
- The University of Queensland
- PTC India Limited - India
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- Commonwealth Bank - Australia
- Merrill Lynch Commodities Europe
- The State Trading Corporation of India Ltd
- Sojitz Corporation - Japan
- Minerals Council of Australia
- TNB Fuel Sdn Bhd - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Dalmia Cement Bharat India
- VISA Power Limited - India
- Ambuja Cements Ltd - India
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- Mintek Dendrill Indonesia
- Tamil Nadu electricity Board
- Star Paper Mills Limited - India
- Metalloyd Limited - United Kingdom
- Uttam Galva Steels Limited - India
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sical Logistics Limited - India
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Marubeni Corporation - India
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- Jorong Barutama Greston.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Anglo American - United Kingdom
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- Kobexindo Tractors - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- London Commodity Brokers - England
- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
- Rio Tinto Coal - Australia
- Directorate Of Revenue Intelligence - India
- IEA Clean Coal Centre - UK
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