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