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