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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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Thursday, 17 February 22
APAC THERMAL COAL PRICES TO EASE ON END OF INDONESIA EXPORT BAN - FITCH RATINGS
Fitch Ratings-Shanghai/Singapore-14 February 2022: APAC thermal coal prices are likely to come under pressure in the near term due to seasonally we ...
Tuesday, 15 February 22
IS ANOTHER COAL SHORTAGE CRISIS LOOMING OVER INDIA? - BUSINESS STANDARD
In December last year, the Federation of Indian Mineral Industries (FIMI) shot off a letter to the Prime Minister claiming that the coal crisis was ...
Tuesday, 15 February 22
THERMAL COAL'S RECORD PRICE RUN MAY END UP ITS OWN WORST ENEMY - REUTERS
The price of benchmark Australian thermal coal rose last week to trade near record highs, providing a short-term boost to producers but increasing ...
Thursday, 10 February 22
INDONESIA: COAL EXPORT BAN - SKULD
Indonesia's coal export ban in the light of force majeure and off-hire clauses
In January 2022, Indonesia, the world's biggest exporte ...
Thursday, 10 February 22
EIA ANALYSIS CONSIDERS DIFFERENT OUTCOMES FOR COAL MARKETS IN INDIA AND SOUTHEAST ASIA
In our International Energy Outlook 2021 (IEO2021) Issues in Focus: Uncertainty in Coal Trade in India and Greater Southeast Asia, we analyze three ...
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- Cigading International Bulk Terminal - Indonesia
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Bhushan Steel Limited - India
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- Bukit Baiduri Energy - Indonesia
- Borneo Indobara - Indonesia
- Commonwealth Bank - Australia
- Leighton Contractors Pty Ltd - Australia
- Deloitte Consulting - India
- OPG Power Generation Pvt Ltd - India
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- CNBM International Corporation - China
- Merrill Lynch Commodities Europe
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- Parry Sugars Refinery, India
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- ASAPP Information Group - India
- Videocon Industries ltd - India
- VISA Power Limited - India
- ICICI Bank Limited - India
- Central Electricity Authority - India
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Indian Oil Corporation Limited
- Planning Commission, India
- Port Waratah Coal Services - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Grasim Industreis Ltd - India
- Heidelberg Cement - Germany
- Economic Council, Georgia
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Uttam Galva Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- AsiaOL BioFuels Corp., Philippines
- The University of Queensland
- India Bulls Power Limited - India
- Coal and Oil Company - UAE
- Asmin Koalindo Tuhup - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- SMC Global Power, Philippines
- Holcim Trading Pte Ltd - Singapore
- Australian Commodity Traders Exchange
- Kobexindo Tractors - Indoneisa
- Indian Energy Exchange, India
- Altura Mining Limited, Indonesia
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Edison Trading Spa - Italy
- MS Steel International - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Indonesian Coal Mining Association
- Meralco Power Generation, Philippines
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Chamber of Mines of South Africa
- Energy Development Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Sakthi Sugars Limited - India
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- Bhatia International Limited - India
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Mercuria Energy - Indonesia
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- McConnell Dowell - Australia
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- Manunggal Multi Energi - Indonesia
- Ambuja Cements Ltd - India
- Essar Steel Hazira Ltd - India
- GMR Energy Limited - India
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- The Treasury - Australian Government
- Thiess Contractors Indonesia
- IEA Clean Coal Centre - UK
- TeaM Sual Corporation - Philippines
- Eastern Coal Council - USA
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- GVK Power & Infra Limited - India
- London Commodity Brokers - England
- SMG Consultants - Indonesia
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vedanta Resources Plc - India
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- Siam City Cement - Thailand
- San Jose City I Power Corp, Philippines
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Bulk Trading Sa - Switzerland
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- Central Java Power - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Pendopo Energi Batubara - Indonesia
- Indogreen Group - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Renaissance Capital - South Africa
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Romanian Commodities Exchange
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- Mjunction Services Limited - India
- Global Green Power PLC Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Wilmar Investment Holdings
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Parliament of New Zealand
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Trasteel International SA, Italy
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- GN Power Mariveles Coal Plant, Philippines
- Petron Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Posco Energy - South Korea
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- PetroVietnam Power Coal Import and Supply Company
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Madhucon Powers Ltd - India
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