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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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Tuesday, 05 April 22
INDONESIAN COAL PRICE REFERENCE HITS RECORD ABOVE $288
COALspot.com: Indonesian Coal Price Reference for April in a steep climb from March 2022.
As expected, Russia – Ukraine war dr ...
Thursday, 31 March 22
CHINA STATE PLANNER ASKS COAL INDEX PROVIDERS TO RECTIFY IRREGULARITIES - REUTERS
China’s state planner has asked some major coal price index providers to rectify “severe irregularities” it had identified in the ...
Thursday, 31 March 22
IMPORTED COAL PRICES TO JUMP 55% IN APR-JUN, IMPACT INDIAN FIRMS: ICRA - LIVEMINT
Supply disruption owing to the Russia-Ukraine conflict could push the price of imported coal by 45-55% in Q1FY23 compared to the previous quarter, ...
Thursday, 31 March 22
CHINA'S COAL OUTPUT SET FOR MODERATE GROWTH IN 2022 - INDUSTRY BODY - REUTERS
China is expected to see its coal output to grow further in 2022 after hitting a record last year, an industry body forecast on Wednesday, as the c ...
Tuesday, 29 March 22
MEMR OF INDONESIA HAS FIXED COAL PRICE AT US$ 90 PER TONNE FOR DOMESTIC INDUSTRIES EXCEPT SMELTER INDUSTRIES; FOR PLN USD 70 IS APPLICABLE
Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif has set the selling price of coal for domestic, industrial except metal processing an ...
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- Malabar Cements Ltd - India
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- Tamil Nadu electricity Board
- Energy Development Corp, Philippines
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
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- Electricity Generating Authority of Thailand
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- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
- White Energy Company Limited
- Indika Energy - Indonesia
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- Indian Oil Corporation Limited
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- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Uttam Galva Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Chamber of Mines of South Africa
- Riau Bara Harum - Indonesia
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Electricity Authority - India
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
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- SMC Global Power, Philippines
- Thiess Contractors Indonesia
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- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Standard Chartered Bank - UAE
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- Price Waterhouse Coopers - Russia
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- Coalindo Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
- Kohat Cement Company Ltd. - Pakistan
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- Sinarmas Energy and Mining - Indonesia
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- GMR Energy Limited - India
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- PowerSource Philippines DevCo
- Formosa Plastics Group - Taiwan
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Singapore Mercantile Exchange
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Bulk Trading Sa - Switzerland
- Barasentosa Lestari - Indonesia
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Posco Energy - South Korea
- Global Coal Blending Company Limited - Australia
- Romanian Commodities Exchange
- London Commodity Brokers - England
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- Renaissance Capital - South Africa
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- Indo Tambangraya Megah - Indonesia
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- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
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- Baramulti Group, Indonesia
- Trasteel International SA, Italy
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- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
- Salva Resources Pvt Ltd - India
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- Mintek Dendrill Indonesia
- Interocean Group of Companies - India
- The State Trading Corporation of India Ltd
- Thai Mozambique Logistica
- Videocon Industries ltd - India
- GAC Shipping (India) Pvt Ltd
- Merrill Lynch Commodities Europe
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Minerals Council of Australia
- Australian Commodity Traders Exchange
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- Power Finance Corporation Ltd., India
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- Metalloyd Limited - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
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- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
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- Commonwealth Bank - Australia
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- Indian Energy Exchange, India
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- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
- Anglo American - United Kingdom
- Tata Chemicals Ltd - India
- Australian Coal Association
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- Planning Commission, India
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- Africa Commodities Group - South Africa
- Parliament of New Zealand
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