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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, 08 March 22
THE HIGH COST OF INDONESIA’S DOWNSTREAM COAL PROJECTS IS UNDERESTIMATED - IEEFA
Three Indonesian ministries have come up with a DME purchase price of US$378/tonne fixed for 20 years compared to IEEFA’s US$601/tonne estima ...
Wednesday, 02 March 22
SHIPPING MARKET INSIGHT - INTERMODAL
The escalating confrontation between Russia and Ukraine has the potential to disrupt global order and set the world back a few decades. While count ...
Tuesday, 22 February 22
THE DRY BULK MARKET HAS MOVED ON A POSITIVE TRACK - ALLIED
The dry bulk market has moved on a positive track as of the past couple of weeks or so. Following the typical softening in freight conditions durin ...
Tuesday, 22 February 22
CHINA'S DAILY OUTPUT OF COAL REBOUNDS TO OVER 12 MLN TONNES - REUTERS
China’s coal output returned to more than 12 million tonnes per day as of Feb. 20, the country’s state planner said on Monday, a level ...
Thursday, 17 February 22
MAJOR INSTITUTIONS PROVIDED OVER $1.5 TRLN TO COAL SECTOR IN 2019-2021, SAYS NGO GROUP - REUTERS
Financial institutions channelled more than $1.5 trillion into the coal industry in loans and underwriting from January 2019 to November 2021, even ...
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- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- Price Waterhouse Coopers - Russia
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- Marubeni Corporation - India
- Deloitte Consulting - India
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
- Australian Commodity Traders Exchange
- SMG Consultants - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bayan Resources Tbk. - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- Indika Energy - Indonesia
- White Energy Company Limited
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Manunggal Multi Energi - Indonesia
- The State Trading Corporation of India Ltd
- Essar Steel Hazira Ltd - India
- Eastern Energy - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Borneo Indobara - Indonesia
- Energy Development Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
- Makarim & Taira - Indonesia
- Siam City Cement PLC, Thailand
- Independent Power Producers Association of India
- The University of Queensland
- Kartika Selabumi Mining - Indonesia
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Energy Link Ltd, New Zealand
- Chamber of Mines of South Africa
- Meenaskhi Energy Private Limited - India
- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- Miang Besar Coal Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Gujarat Mineral Development Corp Ltd - India
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- Ministry of Transport, Egypt
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Oldendorff Carriers - Singapore
- Ambuja Cements Ltd - India
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Romanian Commodities Exchange
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- The Treasury - Australian Government
- San Jose City I Power Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Riau Bara Harum - Indonesia
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- Jorong Barutama Greston.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- European Bulk Services B.V. - Netherlands
- Larsen & Toubro Limited - India
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Gujarat Sidhee Cement - India
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Electricity Generating Authority of Thailand
- Carbofer General Trading SA - India
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- Maheswari Brothers Coal Limited - India
- Indian Oil Corporation Limited
- Wilmar Investment Holdings
- Indian Energy Exchange, India
- Parliament of New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
- Madhucon Powers Ltd - India
- MS Steel International - UAE
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Standard Chartered Bank - UAE
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- SMC Global Power, Philippines
- Bharathi Cement Corporation - India
- Coalindo Energy - Indonesia
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Planning Commission, India
- Billiton Holdings Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- Sakthi Sugars Limited - India
- Minerals Council of Australia
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- Attock Cement Pakistan Limited
- South Luzon Thermal Energy Corporation
- VISA Power Limited - India
- Toyota Tsusho Corporation, Japan
- GAC Shipping (India) Pvt Ltd
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Karaikal Port Pvt Ltd - India
- Star Paper Mills Limited - India
- TeaM Sual Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Aboitiz Power Corporation - Philippines
- Central Java Power - Indonesia
- Lanco Infratech Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PNOC Exploration Corporation - Philippines
- Vizag Seaport Private Limited - India
- Electricity Authority, New Zealand
- Global Green Power PLC Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Savvy Resources Ltd - HongKong
- ASAPP Information Group - India
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- Sindya Power Generating Company Private Ltd
- New Zealand Coal & Carbon
- Baramulti Group, Indonesia
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- London Commodity Brokers - England
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- IEA Clean Coal Centre - UK
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
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