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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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Friday, 22 November 19
UNCERTAINTY IN THERMAL COAL MARKET PERSISTED IN 3Q19 - ADARO
Uncertainty in thermal coal market persisted in 3Q19, mainly due to the actions, or inactions, of China in setting policies for global coal market. ...
Friday, 22 November 19
CIL TO DEVELOP 55 NEW COAL MINES IN NEXT 5 YEARS: COAL MINISTER
State-owned CIL will develop 55 new coal mines and expand 193 existing ones in the next five years, Parliament was informed. The company is also un ...
Thursday, 21 November 19
4TH DEEP OFFSHORE WEST AFRICA CONGRESS 2020
4th Deep Offshore West Africa Congress 2020
17 Janaury 2020
Accra, Ghana
Press Release: Following the great succ ...
Thursday, 21 November 19
INDONESIA PLANS TO KEEP $70/T COAL PRICE CAP FOR PLN, DMO - REUTERS
Indonesia’s energy minister Arifin Tasrif said his ministry plans to maintain a price cap on coal being sold to state electricity utility, PT ...
Wednesday, 20 November 19
FOREIGN DIRECT INVESTMENTS IN COMMERCIAL COAL MINING IN INDIA? - DIPESH DIPU
In August 2019, Government of India announced its approval for Foreign Direct Investment (FDI) for coal mining, processing and sale. Not that FDI i ...
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- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Finance - Indonesia
- Energy Link Ltd, New Zealand
- SN Aboitiz Power Inc, Philippines
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- Sinarmas Energy and Mining - Indonesia
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Deloitte Consulting - India
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- Chamber of Mines of South Africa
- Ceylon Electricity Board - Sri Lanka
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- SMG Consultants - Indonesia
- Lanco Infratech Ltd - India
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Mintek Dendrill Indonesia
- Minerals Council of Australia
- Jorong Barutama Greston.PT - Indonesia
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- Karbindo Abesyapradhi - Indoneisa
- Antam Resourcindo - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Australia Pty. Ltd.
- Coalindo Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Port Waratah Coal Services - Australia
- Medco Energi Mining Internasional
- MS Steel International - UAE
- Economic Council, Georgia
- Globalindo Alam Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- White Energy Company Limited
- Barasentosa Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Videocon Industries ltd - India
- Mercator Lines Limited - India
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- Parliament of New Zealand
- Australian Commodity Traders Exchange
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- Dalmia Cement Bharat India
- Borneo Indobara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- The University of Queensland
- Indonesian Coal Mining Association
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- PTC India Limited - India
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Merrill Lynch Commodities Europe
- Eastern Coal Council - USA
- Rashtriya Ispat Nigam Limited - India
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Posco Energy - South Korea
- Indika Energy - Indonesia
- Siam City Cement PLC, Thailand
- Electricity Authority, New Zealand
- Timah Investasi Mineral - Indoneisa
- Central Electricity Authority - India
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- Uttam Galva Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Kartika Selabumi Mining - Indonesia
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- Vedanta Resources Plc - India
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Alfred C Toepfer International GmbH - Germany
- Ambuja Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Global Business Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bulk Trading Sa - Switzerland
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- Siam City Cement - Thailand
- IEA Clean Coal Centre - UK
- OPG Power Generation Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kaltim Prima Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Manunggal Multi Energi - Indonesia
- Romanian Commodities Exchange
- Energy Development Corp, Philippines
- India Bulls Power Limited - India
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Agrawal Coal Company - India
- Bharathi Cement Corporation - India
- Madhucon Powers Ltd - India
- Marubeni Corporation - India
- London Commodity Brokers - England
- Indogreen Group - Indonesia
- Eastern Energy - Thailand
- Planning Commission, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- International Coal Ventures Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- GMR Energy Limited - India
- Cigading International Bulk Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Attock Cement Pakistan Limited
- New Zealand Coal & Carbon
- Jindal Steel & Power Ltd - India
- VISA Power Limited - India
- Central Java Power - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Formosa Plastics Group - Taiwan
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- Mercuria Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Tata Chemicals Ltd - India
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- Bayan Resources Tbk. - Indonesia
- Renaissance Capital - South Africa
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