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