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