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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, 22 March 23
WILL LOWER GAS PRICES SPARK SWITCHING IN EUROPE AND ASIA?
Record high prices devastated demand for gas and LNG across Asia and Europe last year. But with prices falling, companies are starting to re-evalua ...
Monday, 20 March 23
NTPC MULLS 5.4 MILLION TONNES COAL IMPORT IN FIRST HALF OF 2023-24: PTI
State-run power giant NTPC is planning to import around 5.4 million tonnes of coal to meet the supply shortage during the first half 2023-24 fiscal ...
Monday, 20 March 23
S. AFRICA’S EXXARO RESOURCES SAYS COAL PRICES COOLING OFF - REUTERS
South Africa’s Exxaro Resources on Thursday posted a 28% jump in 2022 profit after seeing average coal prices surge more than 150%, but warne ...
Saturday, 18 March 23
RUSSIAN LNG EXPORTS TO EUROPE REMAIN HIGH - VESSELS VALUE
Russian LNG exports to Europe remained at very high levels in February at 3.6 million CBM, following a 13 month high in January of 4.1 million CBM. ...
Saturday, 18 March 23
HEDGE TO OFFSET LNG VOLATILITY, TRADERS TOLD - BALTIC EXCHANGE
A shift in imports from Asia to Europe led to significant volatility in liquefied natural gas shipping last year, prompting industry experts to urg ...
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- Indogreen Group - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Antam Resourcindo - Indonesia
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Binh Thuan Hamico - Vietnam
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- New Zealand Coal & Carbon
- Coal and Oil Company - UAE
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- Grasim Industreis Ltd - India
- MS Steel International - UAE
- Electricity Generating Authority of Thailand
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- IEA Clean Coal Centre - UK
- Dalmia Cement Bharat India
- Siam City Cement PLC, Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Independent Power Producers Association of India
- Vedanta Resources Plc - India
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- Billiton Holdings Pty Ltd - Australia
- Indian Oil Corporation Limited
- Bhatia International Limited - India
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Straits Asia Resources Limited - Singapore
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- GVK Power & Infra Limited - India
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- Deloitte Consulting - India
- Gujarat Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Sojitz Corporation - Japan
- Riau Bara Harum - Indonesia
- Kideco Jaya Agung - Indonesia
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- Carbofer General Trading SA - India
- Rio Tinto Coal - Australia
- Star Paper Mills Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aditya Birla Group - India
- Minerals Council of Australia
- Ministry of Finance - Indonesia
- Indian Energy Exchange, India
- ASAPP Information Group - India
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- Energy Development Corp, Philippines
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- Interocean Group of Companies - India
- IHS Mccloskey Coal Group - USA
- Ceylon Electricity Board - Sri Lanka
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Bukit Baiduri Energy - Indonesia
- Petron Corporation, Philippines
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Xindia Steels Limited - India
- Indika Energy - Indonesia
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- Uttam Galva Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- Gujarat Mineral Development Corp Ltd - India
- Posco Energy - South Korea
- Ministry of Transport, Egypt
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Parliament of New Zealand
- Indonesian Coal Mining Association
- San Jose City I Power Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Marubeni Corporation - India
- Baramulti Group, Indonesia
- Medco Energi Mining Internasional
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Central Electricity Authority - India
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- Global Coal Blending Company Limited - Australia
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Krishnapatnam Port Company Ltd. - India
- Iligan Light & Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Economic Council, Georgia
- Bukit Makmur.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Edison Trading Spa - Italy
- Australian Coal Association
- Bulk Trading Sa - Switzerland
- Sinarmas Energy and Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- Singapore Mercantile Exchange
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- Lanco Infratech Ltd - India
- Agrawal Coal Company - India
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thiess Contractors Indonesia
- Madhucon Powers Ltd - India
- Karaikal Port Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- McConnell Dowell - Australia
- Aboitiz Power Corporation - Philippines
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Sakthi Sugars Limited - India
- Mercator Lines Limited - India
- Globalindo Alam Lestari - Indonesia
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- VISA Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- Oldendorff Carriers - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- Larsen & Toubro Limited - India
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- Ind-Barath Power Infra Limited - India
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