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