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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, 02 March 23
INDIA, CHINA DEMAND BOOST LOW-RANK THERMAL COAL PRICES IN ASIA - RUSSELL, REUTERS
Signs of stronger import demand from India have arrested the decline in price of the thermal coal grades most commonly sought by the world’s ...
Thursday, 02 March 23
INDIA CHEERS THE RETURN OF ‘KING COAL’ AS INDUSTRY SEES BUOYANT FUTURE - REUTERS
India’s coal industry celebrated the return of its major conference after a three-year pandemic hiatus by presenting a bullish view of demand ...
Wednesday, 01 March 23
GEO CONNECT ASIA RETURNS IN MARCH TO ACCELERATE THE REGION’S GEOSPATIAL AND LOCATION INTELLIGENCE CAPABILITIES
Press Release: The third edition of GCA will be held in conjunction with Digital Construction Asia and the inaugural Drones Asia – an event d ...
Wednesday, 01 March 23
THE DECLINE IN THE COAL PRICE SINCE THE BEGINNING OF THE YEAR HAS BEEN SIGNIFICANT - INTERMODAL
Last week, the front-month API2 future rose by 3.5%, but since the beginning of the year the future has fallen by 39% to $136.65/t, while the Newca ...
Sunday, 26 February 23
MAWANI AND JEDDAH CHAMBER SIGN AN AGREEMENT TO BUILD INTEGRATED LOGISTICS PARK
Press Release: The Saudi Ports Authority (Mawani) and Jeddah Chamber of Commerce and Industry have today inked an agreement to set up an integrated ...
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- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- ASAPP Information Group - India
- GMR Energy Limited - India
- Bhushan Steel Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Borneo Indobara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- Gujarat Sidhee Cement - India
- Vizag Seaport Private Limited - India
- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Aboitiz Power Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Attock Cement Pakistan Limited
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aditya Birla Group - India
- Directorate General of MIneral and Coal - Indonesia
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Thai Mozambique Logistica
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- Deloitte Consulting - India
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Coal and Oil Company - UAE
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- GVK Power & Infra Limited - India
- Indian Energy Exchange, India
- Rio Tinto Coal - Australia
- Baramulti Group, Indonesia
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- Australian Coal Association
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- South Luzon Thermal Energy Corporation
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Independent Power Producers Association of India
- Sarangani Energy Corporation, Philippines
- Merrill Lynch Commodities Europe
- Goldman Sachs - Singapore
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- Electricity Generating Authority of Thailand
- Miang Besar Coal Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Posco Energy - South Korea
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Indian Oil Corporation Limited
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Antam Resourcindo - Indonesia
- Tata Chemicals Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Toyota Tsusho Corporation, Japan
- Alfred C Toepfer International GmbH - Germany
- Global Coal Blending Company Limited - Australia
- Globalindo Alam Lestari - Indonesia
- Medco Energi Mining Internasional
- PTC India Limited - India
- International Coal Ventures Pvt Ltd - India
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- Bhatia International Limited - India
- Eastern Energy - Thailand
- Ceylon Electricity Board - Sri Lanka
- Gujarat Mineral Development Corp Ltd - India
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- Videocon Industries ltd - India
- Mjunction Services Limited - India
- Indogreen Group - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Uttam Galva Steels Limited - India
- Meenaskhi Energy Private Limited - India
- SMC Global Power, Philippines
- Edison Trading Spa - Italy
- Kapuas Tunggal Persada - Indonesia
- Sojitz Corporation - Japan
- Directorate Of Revenue Intelligence - India
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- Gujarat Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- Meralco Power Generation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- Georgia Ports Authority, United States
- Cement Manufacturers Association - India
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Makarim & Taira - Indonesia
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- The University of Queensland
- Minerals Council of Australia
- Romanian Commodities Exchange
- Indo Tambangraya Megah - Indonesia
- Energy Development Corp, Philippines
- The Treasury - Australian Government
- Binh Thuan Hamico - Vietnam
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- PNOC Exploration Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- The State Trading Corporation of India Ltd
- Global Business Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- White Energy Company Limited
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
- Bangladesh Power Developement Board
- Marubeni Corporation - India
- Africa Commodities Group - South Africa
- Electricity Authority, New Zealand
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Formosa Plastics Group - Taiwan
- CNBM International Corporation - China
- Salva Resources Pvt Ltd - India
- Parliament of New Zealand
- London Commodity Brokers - England
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
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