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