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