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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, 23 December 21
INDONESIA’S 2022 COAL OUTPUT SEEN BETWEEN 637 MLN-664 MLN T- OFFICIAL - REUTERS
Indonesia’s 2022 coal output is estimated at between 637 million to 664 million tonnes based on production plans currently being finalised, s ...
Thursday, 23 December 21
VALE ANNOUNCES THE SALE OF ITS COAL ASSETS
Vale informs that, on this date, it has entered into a binding agreement with Vulcan to sell the Moatize coal mine and the Nacala Logistics Corrido ...
Thursday, 23 December 21
INDIA: CAPTIVE POWER PRODUCERS URGE GOVT TO ENSURE NORMAL COAL SUPPLIES - PTI
A captive power producers’ association has urged the government for 100 per cent normalisation of coal supply to captive power producers whil ...
Thursday, 23 December 21
MARKET INSIGHT - INTERMODAL
As an outstanding year for the dry bulk freight market comes to a close, so does a thriving year for the SnP market which can only be compared to 2 ...
Tuesday, 14 December 21
COAL LOCK-IN IN SOUTHEAST ASIA PRESENTS A CHALLENGE FOR THE ASIAN DEVELOPMENT BANK'S COAL RETIREMENT PLAN - IEEFA
In August, the Asian Development Bank (ADB) announced an ambitious plan to buy high emissions coal-fired power plants in Southeast Asia and retire ...
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- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- Electricity Generating Authority of Thailand
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Vedanta Resources Plc - India
- Australian Coal Association
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- Posco Energy - South Korea
- Romanian Commodities Exchange
- New Zealand Coal & Carbon
- Intertek Mineral Services - Indonesia
- Minerals Council of Australia
- Kepco SPC Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Samtan Co., Ltd - South Korea
- Orica Mining Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Goldman Sachs - Singapore
- Energy Development Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Essar Steel Hazira Ltd - India
- Energy Link Ltd, New Zealand
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- Karaikal Port Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Pendopo Energi Batubara - Indonesia
- Central Java Power - Indonesia
- Port Waratah Coal Services - Australia
- Coastal Gujarat Power Limited - India
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- Borneo Indobara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Ministry of Finance - Indonesia
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Salva Resources Pvt Ltd - India
- The University of Queensland
- Kartika Selabumi Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Ambuja Cements Ltd - India
- Kumho Petrochemical, South Korea
- Billiton Holdings Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Electricity Authority, New Zealand
- Baramulti Group, Indonesia
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sree Jayajothi Cements Limited - India
- Miang Besar Coal Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Agrawal Coal Company - India
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Uttam Galva Steels Limited - India
- Mercator Lines Limited - India
- VISA Power Limited - India
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Planning Commission, India
- Central Electricity Authority - India
- Bulk Trading Sa - Switzerland
- TeaM Sual Corporation - Philippines
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Parliament of New Zealand
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Commonwealth Bank - Australia
- Merrill Lynch Commodities Europe
- ICICI Bank Limited - India
- ASAPP Information Group - India
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- Manunggal Multi Energi - Indonesia
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Leighton Contractors Pty Ltd - Australia
- White Energy Company Limited
- Meenaskhi Energy Private Limited - India
- Binh Thuan Hamico - Vietnam
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- Indian Oil Corporation Limited
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Commodity Traders Exchange
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Indian Energy Exchange, India
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Cigading International Bulk Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- Sakthi Sugars Limited - India
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Lanco Infratech Ltd - India
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- CNBM International Corporation - China
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- Heidelberg Cement - Germany
- Bukit Baiduri Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Sinarmas Energy and Mining - Indonesia
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Standard Chartered Bank - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- IHS Mccloskey Coal Group - USA
- Videocon Industries ltd - India
- Maheswari Brothers Coal Limited - India
- Indonesian Coal Mining Association
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- CIMB Investment Bank - Malaysia
- Latin American Coal - Colombia
- Makarim & Taira - Indonesia
- Malabar Cements Ltd - India
- Eastern Coal Council - USA
- PowerSource Philippines DevCo
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- Mjunction Services Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Altura Mining Limited, Indonesia
- Edison Trading Spa - Italy
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- South Luzon Thermal Energy Corporation
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
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