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