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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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- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Energy Development Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Straits Asia Resources Limited - Singapore
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Bayan Resources Tbk. - Indonesia
- GAC Shipping (India) Pvt Ltd
- OPG Power Generation Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Formosa Plastics Group - Taiwan
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indogreen Group - Indonesia
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- SMG Consultants - Indonesia
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- Bhatia International Limited - India
- TeaM Sual Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- ASAPP Information Group - India
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- GMR Energy Limited - India
- CNBM International Corporation - China
- Salva Resources Pvt Ltd - India
- New Zealand Coal & Carbon
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- Tata Chemicals Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Parliament of New Zealand
- Edison Trading Spa - Italy
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- Krishnapatnam Port Company Ltd. - India
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- GVK Power & Infra Limited - India
- ICICI Bank Limited - India
- Mercuria Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Larsen & Toubro Limited - India
- Dalmia Cement Bharat India
- Malabar Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Central Java Power - Indonesia
- Cement Manufacturers Association - India
- Sakthi Sugars Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kobexindo Tractors - Indoneisa
- Independent Power Producers Association of India
- Ind-Barath Power Infra Limited - India
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Posco Energy - South Korea
- LBH Netherlands Bv - Netherlands
- Vizag Seaport Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Merrill Lynch Commodities Europe
- Standard Chartered Bank - UAE
- Karbindo Abesyapradhi - Indoneisa
- Aditya Birla Group - India
- Gujarat Sidhee Cement - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- India Bulls Power Limited - India
- Kaltim Prima Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Minerals Council of Australia
- Africa Commodities Group - South Africa
- Thai Mozambique Logistica
- The University of Queensland
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- Eastern Energy - Thailand
- Pendopo Energi Batubara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Mjunction Services Limited - India
- Baramulti Group, Indonesia
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Xindia Steels Limited - India
- Central Electricity Authority - India
- IEA Clean Coal Centre - UK
- Toyota Tsusho Corporation, Japan
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Indika Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Rashtriya Ispat Nigam Limited - India
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Iligan Light & Power Inc, Philippines
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Carbofer General Trading SA - India
- Altura Mining Limited, Indonesia
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Jindal Steel & Power Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- White Energy Company Limited
- Eastern Coal Council - USA
- Mintek Dendrill Indonesia
- Australian Commodity Traders Exchange
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Bangladesh Power Developement Board
- Heidelberg Cement - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- Rio Tinto Coal - Australia
- IHS Mccloskey Coal Group - USA
- Semirara Mining and Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Manunggal Multi Energi - Indonesia
- McConnell Dowell - Australia
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Australian Coal Association
- Essar Steel Hazira Ltd - India
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Kumho Petrochemical, South Korea
- Price Waterhouse Coopers - Russia
- Interocean Group of Companies - India
- Orica Mining Services - Indonesia
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Tamil Nadu electricity Board
- Energy Link Ltd, New Zealand
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Attock Cement Pakistan Limited
- Singapore Mercantile Exchange
- Kapuas Tunggal Persada - Indonesia
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
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