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