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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, 06 March 20
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Thursday, 05 March 20
COAL IMPORTS DOWN IN MAJOR ASIAN MARKETS, AND CORONAVIRUS NOT THE DRIVING FORCE - CLYDE RUSSELL
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Thursday, 05 March 20
SEABORNE COAL'S STRUGGLES IN ASIA ARE MORE THAN JUST CHINA CORONAVIRUS - REUTERS
Asia’s seaborne coal markets stumbled in February and it appears the coronavirus outbreak in China may dodge most of the blame, with the weak ...
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- Gujarat Mineral Development Corp Ltd - India
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- OPG Power Generation Pvt Ltd - India
- Latin American Coal - Colombia
- Chettinad Cement Corporation Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Energy Link Ltd, New Zealand
- Agrawal Coal Company - India
- Standard Chartered Bank - UAE
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- Central Java Power - Indonesia
- GMR Energy Limited - India
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- PNOC Exploration Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- Coalindo Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- International Coal Ventures Pvt Ltd - India
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- Price Waterhouse Coopers - Russia
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- Ministry of Finance - Indonesia
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- Indika Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Riau Bara Harum - Indonesia
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- White Energy Company Limited
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- Wood Mackenzie - Singapore
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- Eastern Energy - Thailand
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- Kepco SPC Power Corporation, Philippines
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- Marubeni Corporation - India
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- Bharathi Cement Corporation - India
- Intertek Mineral Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
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- Interocean Group of Companies - India
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- Therma Luzon, Inc, Philippines
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- Georgia Ports Authority, United States
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- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Transport, Egypt
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- VISA Power Limited - India
- Ministry of Mines - Canada
- Toyota Tsusho Corporation, Japan
- Indogreen Group - Indonesia
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- India Bulls Power Limited - India
- Independent Power Producers Association of India
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- Karbindo Abesyapradhi - Indoneisa
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
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- Mercator Lines Limited - India
- Electricity Authority, New Zealand
- Economic Council, Georgia
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- Petron Corporation, Philippines
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- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- Siam City Cement PLC, Thailand
- Straits Asia Resources Limited - Singapore
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- Australian Coal Association
- Oldendorff Carriers - Singapore
- Power Finance Corporation Ltd., India
- Krishnapatnam Port Company Ltd. - India
- Mjunction Services Limited - India
- New Zealand Coal & Carbon
- PTC India Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Minerals Council of Australia
- Videocon Industries ltd - India
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- Eastern Coal Council - USA
- Coastal Gujarat Power Limited - India
- Bangladesh Power Developement Board
- Kumho Petrochemical, South Korea
- AsiaOL BioFuels Corp., Philippines
- Renaissance Capital - South Africa
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- Barasentosa Lestari - Indonesia
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- Global Business Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- London Commodity Brokers - England
- Directorate General of MIneral and Coal - Indonesia
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Maharashtra Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
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- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
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- Indo Tambangraya Megah - Indonesia
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- Timah Investasi Mineral - Indoneisa
- Ambuja Cements Ltd - India
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Energy Exchange, India
- Ind-Barath Power Infra Limited - India
- Parliament of New Zealand
- Africa Commodities Group - South Africa
- Bhushan Steel Limited - India
- Trasteel International SA, Italy
- Savvy Resources Ltd - HongKong
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Uttam Galva Steels Limited - India
- The University of Queensland
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- Maheswari Brothers Coal Limited - India
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Planning Commission, India
- SN Aboitiz Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
- San Jose City I Power Corp, Philippines
- Salva Resources Pvt Ltd - India
- Sical Logistics Limited - India
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- Dalmia Cement Bharat India
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