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