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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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Thursday, 19 December 19
BANGLADESH'S NBR CUTS VAT ON COAL IMPORT FOR POWER PLANTS - THE DAILY STAR
The National Board of Revenue (NBR) reduced value added tax on the import of coal for power plants to 5 percent from present 15 percent for five ye ...
Wednesday, 18 December 19
AVERAGE PRICES OF COAL IN 2018 WERE MORE THAN 60% HIGHER THAN IN 2016 - IEA
Coal use grew again in 2018.
Global coal demand increased by 1.1%, continuing the rebound that began in 2017 after three years of decline ...
Wednesday, 18 December 19
ASIA IS SET TO SUPPORT GLOBAL COAL DEMAND FOR THE NEXT FIVE YEARS - IEA
Press Release: Global coal demand is expected to decline in 2019 but remain broadly stable over the next five years, supported by robust growth in ...
Wednesday, 18 December 19
SHIPPING MARKET INSIGHT - INTERMODAL
As we all know very well by now, the reduction in the maximum allowable sulphur content of marine fuels in 2020 is likely to have a massive impact ...
Tuesday, 17 December 19
AUSTRALIA ENERGY MARKET OPERATOR TURNS SCROOGE ON COAL LOBBY: RUSSELL
Australia, which vies with Indonesia for the title of the world’s largest coal exporter, is planning for an electricity future where use of t ...
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- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Aditya Birla Group - India
- Jaiprakash Power Ventures ltd
- Commonwealth Bank - Australia
- Kohat Cement Company Ltd. - Pakistan
- Bukit Makmur.PT - Indonesia
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- Goldman Sachs - Singapore
- Sindya Power Generating Company Private Ltd
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Eastern Energy - Thailand
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- Videocon Industries ltd - India
- Semirara Mining and Power Corporation, Philippines
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indo Tambangraya Megah - Indonesia
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- Dalmia Cement Bharat India
- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- Kaltim Prima Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Toyota Tsusho Corporation, Japan
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Vedanta Resources Plc - India
- Global Green Power PLC Corporation, Philippines
- Power Finance Corporation Ltd., India
- Petrochimia International Co. Ltd.- Taiwan
- Metalloyd Limited - United Kingdom
- Baramulti Group, Indonesia
- Wilmar Investment Holdings
- Indian Oil Corporation Limited
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- London Commodity Brokers - England
- Jindal Steel & Power Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Billiton Holdings Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
- Indian Energy Exchange, India
- Price Waterhouse Coopers - Russia
- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- PTC India Limited - India
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Maheswari Brothers Coal Limited - India
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Globalindo Alam Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- ASAPP Information Group - India
- Indika Energy - Indonesia
- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Ambuja Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- Attock Cement Pakistan Limited
- White Energy Company Limited
- Xindia Steels Limited - India
- Orica Australia Pty. Ltd.
- The University of Queensland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- Parry Sugars Refinery, India
- IHS Mccloskey Coal Group - USA
- Anglo American - United Kingdom
- The State Trading Corporation of India Ltd
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Wood Mackenzie - Singapore
- Aboitiz Power Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- Malabar Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Thai Mozambique Logistica
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- GAC Shipping (India) Pvt Ltd
- IEA Clean Coal Centre - UK
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- Ind-Barath Power Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- Semirara Mining Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Port Waratah Coal Services - Australia
- Coalindo Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- Gujarat Mineral Development Corp Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- Central Electricity Authority - India
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- McConnell Dowell - Australia
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- Thiess Contractors Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Larsen & Toubro Limited - India
- Makarim & Taira - Indonesia
- Karaikal Port Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- Ministry of Transport, Egypt
- VISA Power Limited - India
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- Global Business Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Coal Association
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- SMC Global Power, Philippines
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
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