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