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