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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, 03 February 22
COAL SHORTAGE NOW AT ALARMING LEVELS, SAY ALUMINIUM PRODUCERS - IANS
With no relief in sight despite coal stocks running critically low and production disruptions looming across the Indian aluminium sector, the Alumi ...
Wednesday, 02 February 22
HIGH COKING COAL PRICES PROVIDE GLIMPSE INTO STEELMAKING'S FUTURE - MCKINSEY
Last year was a volatile one in global commodity markets. Demand for coking coal, an essential raw material in the production of steel, was extreme ...
Wednesday, 02 February 22
INDONESIA'S RESTRICTIONS ON COMMODITIES RATTLE MARKETS, MORE MOVES LIKELY - REUTERS
In just the first month of this year, Indonesian policymakers have rattled global markets with restrictions on some of its biggest commodities expo ...
Wednesday, 02 February 22
CHINA'S TOP COAL PRODUCER FORECASTS 28 PCT PROFIT GROWTH IN 2021 - XINHUA
China Shenhua Energy Company Limited, one of the country’s biggest coal producers, said its net profits are expected to jump by 28 percent in ...
Wednesday, 02 February 22
COAL STORAGE IN CHINA’S POWER PLANTS NEAR RECORD HIGHS - XINHUA
Coal inflows into China’s power plants have picked up, bringing their coal storage to near record highs, the National Development and Reform ...
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- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
- Maheswari Brothers Coal Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Manunggal Multi Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- The Treasury - Australian Government
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement PLC, Thailand
- Interocean Group of Companies - India
- Vizag Seaport Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Renaissance Capital - South Africa
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- Economic Council, Georgia
- MS Steel International - UAE
- The State Trading Corporation of India Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Dalmia Cement Bharat India
- Straits Asia Resources Limited - Singapore
- The University of Queensland
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Price Waterhouse Coopers - Russia
- Kideco Jaya Agung - Indonesia
- Deloitte Consulting - India
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Indian Oil Corporation Limited
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- PowerSource Philippines DevCo
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- Bhushan Steel Limited - India
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- VISA Power Limited - India
- Aditya Birla Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- GMR Energy Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Merrill Lynch Commodities Europe
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- TeaM Sual Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Standard Chartered Bank - UAE
- Chettinad Cement Corporation Ltd - India
- Goldman Sachs - Singapore
- Kobexindo Tractors - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- Port Waratah Coal Services - Australia
- Pendopo Energi Batubara - Indonesia
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- ICICI Bank Limited - India
- Sinarmas Energy and Mining - Indonesia
- Borneo Indobara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMC Global Power, Philippines
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Central Electricity Authority - India
- Marubeni Corporation - India
- McConnell Dowell - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bhatia International Limited - India
- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Energy Link Ltd, New Zealand
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Global Business Power Corporation, Philippines
- Parliament of New Zealand
- Sree Jayajothi Cements Limited - India
- Trasteel International SA, Italy
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- Agrawal Coal Company - India
- Commonwealth Bank - Australia
- Tamil Nadu electricity Board
- PTC India Limited - India
- Planning Commission, India
- Indonesian Coal Mining Association
- Vijayanagar Sugar Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Timah Investasi Mineral - Indoneisa
- Minerals Council of Australia
- Eastern Energy - Thailand
- Wilmar Investment Holdings
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Australian Coal Association
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- GVK Power & Infra Limited - India
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- San Jose City I Power Corp, Philippines
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- Kapuas Tunggal Persada - Indonesia
- Jaiprakash Power Ventures ltd
- Directorate General of MIneral and Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- Coastal Gujarat Power Limited - India
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- Carbofer General Trading SA - India
- Alfred C Toepfer International GmbH - Germany
- Coal and Oil Company - UAE
- Xindia Steels Limited - India
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