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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, 05 January 22
INDONESIA WARNS COAL SUPPLY CRUNCH NOT OVER AS CHINA PRICES RALLY - REUTERS
Indonesia has warned that its coal supply situation remains critical, ahead of Wednesday’s (Jan 5) review of its export ban, unnerving global ...
Tuesday, 28 December 21
INDIA'S ADANI NEARS FIRST COAL SHIPMENT FROM SHUNNED AUSTRALIAN MINE - REUTERS
India’s Adani Group ADEL.NS is preparing to ship the first coal cargo from Australia’s most controversial mine, after battling a seven- ...
Thursday, 23 December 21
COAL TO STAY AS MAJOR SOURCE OF ENERGY IN FORESEEABLE FUTURE: JOSHI - BUSINESS STANDARD
Coal will stay as a major source of energy in the foreseeable future as it is an affordable source of energy with substantial reserve, Parliament w ...
Thursday, 23 December 21
ANNUAL U.S. COAL-FIRED ELECTRICITY GENERATION WILL INCREASE FOR THE FIRST TIME SINCE 2014 - EIA
From December 20 through December 30, Today in Energy will feature some of our favorite articles from 2021. Today’s article was originally pu ...
Thursday, 23 December 21
COAL DEMAND TO PEAK IN INDIA BY 2030, WILL BACK UP RENEWABLES: NITI REPORT - BUSINESS STANDARD
Coal will remain India’s mainstay energy source and the country will shape global demand this decade, two reports have said a month after the ...
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- Sree Jayajothi Cements Limited - India
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Kohat Cement Company Ltd. - Pakistan
- Australian Commodity Traders Exchange
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- MS Steel International - UAE
- Sarangani Energy Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Coastal Gujarat Power Limited - India
- The Treasury - Australian Government
- Gujarat Sidhee Cement - India
- AsiaOL BioFuels Corp., Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Rio Tinto Coal - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Salva Resources Pvt Ltd - India
- Petron Corporation, Philippines
- PTC India Limited - India
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Economic Council, Georgia
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- Tamil Nadu electricity Board
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- Bhushan Steel Limited - India
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- Simpson Spence & Young - Indonesia
- Ministry of Finance - Indonesia
- Global Coal Blending Company Limited - Australia
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- Bukit Baiduri Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Bulk Trading Sa - Switzerland
- Singapore Mercantile Exchange
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- Merrill Lynch Commodities Europe
- European Bulk Services B.V. - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- GMR Energy Limited - India
- Indian Energy Exchange, India
- Trasteel International SA, Italy
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- Australian Coal Association
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- Metalloyd Limited - United Kingdom
- Xindia Steels Limited - India
- SMC Global Power, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Star Paper Mills Limited - India
- Central Electricity Authority - India
- Jaiprakash Power Ventures ltd
- Oldendorff Carriers - Singapore
- Karaikal Port Pvt Ltd - India
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- Kapuas Tunggal Persada - Indonesia
- Orica Australia Pty. Ltd.
- Semirara Mining Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- ASAPP Information Group - India
- Toyota Tsusho Corporation, Japan
- Price Waterhouse Coopers - Russia
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Mjunction Services Limited - India
- Anglo American - United Kingdom
- Kumho Petrochemical, South Korea
- Commonwealth Bank - Australia
- Independent Power Producers Association of India
- Interocean Group of Companies - India
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- Sindya Power Generating Company Private Ltd
- Indian Oil Corporation Limited
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Minerals Council of Australia
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- Carbofer General Trading SA - India
- TeaM Sual Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Asmin Koalindo Tuhup - Indonesia
- Romanian Commodities Exchange
- Thiess Contractors Indonesia
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- Thai Mozambique Logistica
- Ind-Barath Power Infra Limited - India
- Intertek Mineral Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Sical Logistics Limited - India
- Billiton Holdings Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Goldman Sachs - Singapore
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Heidelberg Cement - Germany
- Bukit Makmur.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Karbindo Abesyapradhi - Indoneisa
- Iligan Light & Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Manunggal Multi Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Barasentosa Lestari - Indonesia
- Orica Mining Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Agrawal Coal Company - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- VISA Power Limited - India
- Meralco Power Generation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Port Waratah Coal Services - Australia
- GAC Shipping (India) Pvt Ltd
- Semirara Mining and Power Corporation, Philippines
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Wood Mackenzie - Singapore
- The University of Queensland
- Jindal Steel & Power Ltd - India
- Meenaskhi Energy Private Limited - India
- Antam Resourcindo - Indonesia
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