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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, 08 March 19
KOMIPO INVITES BIDS FOR 2.6 MILLION TONS OF AUSTRALIAN 5700 NAR COAL FOR FIVE YEARS
South Korea state-owned utility Korea Midland Power (KOMIPO) issued a tender for 520,000 MT of min. 5700 NAR coal of Australian origin to be burnt ...
Friday, 08 March 19
CHINA'S COAL DEMAND FORECAST TO DROP SLOWLY - YONHAP
China’s coal demand is expected to fall at a snail’s pace over the next 20 years due to the country’s preference for the cheap fo ...
Thursday, 07 March 19
INDONESIAN COAL PRICE REFERENCE PLUNGE TO LOWEST IN SEVEN MONTHS
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
Wednesday, 06 March 19
KOSPO INVITES BIDS FOR 80,000 MT OF 3800 NCV COAL FOR 21 - 30 MARCH, 2019 LOADING
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 80,000 MT of min 3,800 kcal/kg NCV low calor ...
Wednesday, 06 March 19
KOREA SOUTHERN POWER CO INVITES BIDS FOR 980,000 MT OF 4600 NCV COAL FOR THREE YEARS
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 320,000 MT of min 4,600 kcal/kg NCV low calo ...
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- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Bhushan Steel Limited - India
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- Electricity Generating Authority of Thailand
- Heidelberg Cement - Germany
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- Holcim Trading Pte Ltd - Singapore
- Sakthi Sugars Limited - India
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Bangladesh Power Developement Board
- Merrill Lynch Commodities Europe
- Bahari Cakrawala Sebuku - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Mercuria Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- White Energy Company Limited
- Indogreen Group - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- The State Trading Corporation of India Ltd
- India Bulls Power Limited - India
- Aditya Birla Group - India
- Malabar Cements Ltd - India
- Mintek Dendrill Indonesia
- Miang Besar Coal Terminal - Indonesia
- Makarim & Taira - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Jaiprakash Power Ventures ltd
- Orica Mining Services - Indonesia
- CIMB Investment Bank - Malaysia
- Pendopo Energi Batubara - Indonesia
- Cement Manufacturers Association - India
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Borneo Indobara - Indonesia
- South Luzon Thermal Energy Corporation
- Timah Investasi Mineral - Indoneisa
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- Larsen & Toubro Limited - India
- Binh Thuan Hamico - Vietnam
- Siam City Cement - Thailand
- Maheswari Brothers Coal Limited - India
- European Bulk Services B.V. - Netherlands
- Meenaskhi Energy Private Limited - India
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- Energy Development Corp, Philippines
- MS Steel International - UAE
- Grasim Industreis Ltd - India
- Straits Asia Resources Limited - Singapore
- VISA Power Limited - India
- Sree Jayajothi Cements Limited - India
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- GN Power Mariveles Coal Plant, Philippines
- SMG Consultants - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Videocon Industries ltd - India
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- Minerals Council of Australia
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
- Bhoruka Overseas - Indonesia
- SMC Global Power, Philippines
- Salva Resources Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Attock Cement Pakistan Limited
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Deloitte Consulting - India
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- Vizag Seaport Private Limited - India
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- Chettinad Cement Corporation Ltd - India
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- Riau Bara Harum - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Energy Link Ltd, New Zealand
- Port Waratah Coal Services - Australia
- Toyota Tsusho Corporation, Japan
- Ind-Barath Power Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Parry Sugars Refinery, India
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Meralco Power Generation, Philippines
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- Coalindo Energy - Indonesia
- Petron Corporation, Philippines
- Indika Energy - Indonesia
- Indonesian Coal Mining Association
- Semirara Mining Corp, Philippines
- Eastern Energy - Thailand
- Billiton Holdings Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Leighton Contractors Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- Sarangani Energy Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Rashtriya Ispat Nigam Limited - India
- Posco Energy - South Korea
- Sindya Power Generating Company Private Ltd
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- GMR Energy Limited - India
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Altura Mining Limited, Indonesia
- Indo Tambangraya Megah - Indonesia
- Planning Commission, India
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- Georgia Ports Authority, United States
- GVK Power & Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Globalindo Alam Lestari - Indonesia
- Interocean Group of Companies - India
- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Renaissance Capital - South Africa
- Star Paper Mills Limited - India
- PTC India Limited - India
- Global Business Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Madhucon Powers Ltd - India
- Electricity Authority, New Zealand
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- Kohat Cement Company Ltd. - Pakistan
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Central Electricity Authority - India
- San Jose City I Power Corp, Philippines
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- Medco Energi Mining Internasional
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
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