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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$1.7¢/kWh more.
Solar and wind are now the lowest-cost energy sources globally and are expected to become even cheaper by 2030. Notably, maintaining coal-fired power plants is more expensive than constructing entirely new, rapidly built renewable energy plants.
Consequently, the gradual retirement of coal-fired power plants and a concerted transition to renewable energy sources will be a win-win solution for Indonesia to fulfill its Paris Agreement commitments and financial goals.
Mutya Yustika, IEEFA
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Wednesday, 08 January 20
WHAT IS BIMCO THINKING ABOUT 2020? - BIMCO
Every year, BIMCO considers what is in store for the shipping industry and for BIMCO in the coming years, while also reflecting on the year gone by ...
Wednesday, 08 January 20
VINACOMIN SETS TO SELL 49 MILLION TONNES OF COAL IN 2020 - VIETNAM NET
The Vietnam National Coal-Mineral Industries Holding Corporation Limited (Vinacomin) has set to sell 49 million tonnes of coal in 2020, a year-on-y ...
Wednesday, 08 January 20
CHINA'S COAL-RICH PROVINCE CUTS 18.95 MLN TONNES OF CAPACITY IN 2019 - XINHUA
North China’s Shanxi Province reduced its coal production capacity by 18.95 million tonnes by closing 18 coal mines in 2019.
A ...
Wednesday, 08 January 20
JANUARY INDONESIAN COAL PRICE REFERENCE SLIPS US$ 0.37 MOM
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
Tuesday, 07 January 20
CLEANER AIR IN 2020: 0.5% SULPHUR CAP FOR SHIPS ENTERS INTO FORCE WORLDWIDE - EUROPEAN COMMISSION
From 1 January 2020, the maximum sulphur content of marine fuels is reduced to 0.5% (down from 3.5%) globally – reducing air pollution and pr ...
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- Leighton Contractors Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- ASAPP Information Group - India
- Bangladesh Power Developement Board
- Manunggal Multi Energi - Indonesia
- McConnell Dowell - Australia
- Bhatia International Limited - India
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- Merrill Lynch Commodities Europe
- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- LBH Netherlands Bv - Netherlands
- White Energy Company Limited
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- New Zealand Coal & Carbon
- Planning Commission, India
- Goldman Sachs - Singapore
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Salva Resources Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sojitz Corporation - Japan
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- GVK Power & Infra Limited - India
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Central Java Power - Indonesia
- GMR Energy Limited - India
- Metalloyd Limited - United Kingdom
- Star Paper Mills Limited - India
- Australian Commodity Traders Exchange
- Australian Coal Association
- Orica Mining Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- Marubeni Corporation - India
- SMC Global Power, Philippines
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Economic Council, Georgia
- Indian Oil Corporation Limited
- Kaltim Prima Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Maheswari Brothers Coal Limited - India
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Madhucon Powers Ltd - India
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- Dalmia Cement Bharat India
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- Carbofer General Trading SA - India
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- Sical Logistics Limited - India
- Vedanta Resources Plc - India
- Altura Mining Limited, Indonesia
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- Parliament of New Zealand
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- Bulk Trading Sa - Switzerland
- TeaM Sual Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement - Thailand
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Heidelberg Cement - Germany
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Iligan Light & Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Lanco Infratech Ltd - India
- Antam Resourcindo - Indonesia
- Orica Australia Pty. Ltd.
- Thiess Contractors Indonesia
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Edison Trading Spa - Italy
- Electricity Generating Authority of Thailand
- Karaikal Port Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- London Commodity Brokers - England
- Agrawal Coal Company - India
- Commonwealth Bank - Australia
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Petron Corporation, Philippines
- Deloitte Consulting - India
- Coalindo Energy - Indonesia
- Tamil Nadu electricity Board
- India Bulls Power Limited - India
- The Treasury - Australian Government
- The University of Queensland
- Africa Commodities Group - South Africa
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Wood Mackenzie - Singapore
- Banpu Public Company Limited - Thailand
- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- Semirara Mining Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Larsen & Toubro Limited - India
- SN Aboitiz Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Borneo Indobara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Grasim Industreis Ltd - India
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Formosa Plastics Group - Taiwan
- Intertek Mineral Services - Indonesia
- Latin American Coal - Colombia
- Vizag Seaport Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- Cigading International Bulk Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indika Energy - Indonesia
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- Neyveli Lignite Corporation Ltd, - India
- Global Business Power Corporation, Philippines
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