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