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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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Wednesday, 02 February 22
MARKET INSIGHT - INTERMODAL
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Monday, 31 January 22
HOW INDONESIA'S COAL EXPORT BAN COULD IMPACT INDIA - IEEFA
What does it mean for power generation and energy security?
Not long ago, India faced coal shortages due to a decline in domestic co ...
Sunday, 30 January 22
AIR PRODUCTS' COAL GASIFICATION PROPOSAL TRIGGERS LOOMING POLICY DISPUTES IN INDONESIA - IEEFA
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In ...
Sunday, 30 January 22
ENDGAME FOR NEW COAL POWER PROJECTS? - IEEFA INDIA
Retired coal units must be replaced only by assets that can provide grid flexibility
Reportedly, an expert committee appointed by th ...
Thursday, 27 January 22
2022 - A YEAR OF REBALANCING FOR METALS AND MINING - WOOD MACKENZIE
If 2021 was the year of rebound for metals and mining (M&M) commodities, then 2022 is shaping as the year of rebalance, says Wood Mackenzie, a ...
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- Ind-Barath Power Infra Limited - India
- White Energy Company Limited
- Dalmia Cement Bharat India
- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
- International Coal Ventures Pvt Ltd - India
- Orica Mining Services - Indonesia
- Karaikal Port Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- Minerals Council of Australia
- Makarim & Taira - Indonesia
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- Posco Energy - South Korea
- Standard Chartered Bank - UAE
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- Singapore Mercantile Exchange
- European Bulk Services B.V. - Netherlands
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- Parliament of New Zealand
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- Thai Mozambique Logistica
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Bhatia International Limited - India
- Grasim Industreis Ltd - India
- Petron Corporation, Philippines
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- Gujarat Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Iligan Light & Power Inc, Philippines
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- London Commodity Brokers - England
- Vijayanagar Sugar Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- CNBM International Corporation - China
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Banpu Public Company Limited - Thailand
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- Energy Link Ltd, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- Merrill Lynch Commodities Europe
- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Commonwealth Bank - Australia
- Madhucon Powers Ltd - India
- Electricity Authority, New Zealand
- Straits Asia Resources Limited - Singapore
- Chamber of Mines of South Africa
- Indogreen Group - Indonesia
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- Australian Coal Association
- Baramulti Group, Indonesia
- Sindya Power Generating Company Private Ltd
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Electricity Generating Authority of Thailand
- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- Sree Jayajothi Cements Limited - India
- Wilmar Investment Holdings
- Central Electricity Authority - India
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Bukit Asam (Persero) Tbk - Indonesia
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Kartika Selabumi Mining - Indonesia
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- Siam City Cement PLC, Thailand
- Essar Steel Hazira Ltd - India
- Cement Manufacturers Association - India
- Indika Energy - Indonesia
- Global Business Power Corporation, Philippines
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- CIMB Investment Bank - Malaysia
- Port Waratah Coal Services - Australia
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Riau Bara Harum - Indonesia
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Therma Luzon, Inc, Philippines
- Sojitz Corporation - Japan
- Cigading International Bulk Terminal - Indonesia
- GVK Power & Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Malabar Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Ceylon Electricity Board - Sri Lanka
- Maheswari Brothers Coal Limited - India
- LBH Netherlands Bv - Netherlands
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Renaissance Capital - South Africa
- Parry Sugars Refinery, India
- Barasentosa Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- Trasteel International SA, Italy
- Krishnapatnam Port Company Ltd. - India
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Georgia Ports Authority, United States
- Semirara Mining Corp, Philippines
- TeaM Sual Corporation - Philippines
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