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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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Tuesday, 09 November 21
ASIA-PACIFIC IS HOME TO SOME OF THE WORLD'S LARGEST CARBON-EMITTERS - 2 CHARTS SHOW ITS RELIANCE ON COAL - CNBC
Asia-Pacific is home to some of the world’s largest carbon emitters — and experts say much of global efforts to fight climate change de ...
Tuesday, 09 November 21
CHINA DAILY COAL OUTPUT HITS MULTI-YEAR PEAK, PRICES EXPECTED TO FALL - REUTERS
China’s daily coal output hit 11.93 million tonnes last week, a multi-year high as more capacity returned to operation, the state planner sai ...
Thursday, 04 November 21
CHINA'S COAL MARKET SEES SIGNIFICANT IMPROVEMENTS: NDRC - GLOBAL TIMES
China’s top economic planner has declared initial success in its efforts to ensure coal supply and stabilize prices, saying that daily coal o ...
Thursday, 04 November 21
CHINA THERMAL COAL PRICES RISE AFTER FALLING FOR 10 DAYS - REUTERS
China thermal coal futures rebounded on Wednesday after falling for 10 days on an expected jump in fuel demand to meet heating needs amid forecasts ...
Thursday, 04 November 21
FASTER DECARBONISATION: BACK TO BASICS FOR THE MINING INDUSTRY? - WOOD MACKENZIE
To the uninitiated, rugby is a technical and complicated game. As young schoolboys it was all a wee bit confusing and we invariably ended up on the ...
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- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Borneo Indobara - Indonesia
- Vizag Seaport Private Limited - India
- Energy Development Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- Vijayanagar Sugar Pvt Ltd - India
- Parry Sugars Refinery, India
- Anglo American - United Kingdom
- Banpu Public Company Limited - Thailand
- Power Finance Corporation Ltd., India
- Bahari Cakrawala Sebuku - Indonesia
- Carbofer General Trading SA - India
- San Jose City I Power Corp, Philippines
- Petron Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Metalloyd Limited - United Kingdom
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Independent Power Producers Association of India
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
- Electricity Generating Authority of Thailand
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Cigading International Bulk Terminal - Indonesia
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Mintek Dendrill Indonesia
- GVK Power & Infra Limited - India
- Makarim & Taira - Indonesia
- SN Aboitiz Power Inc, Philippines
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- Leighton Contractors Pty Ltd - Australia
- Eastern Energy - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Semirara Mining and Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Siam City Cement PLC, Thailand
- Minerals Council of Australia
- Antam Resourcindo - Indonesia
- PowerSource Philippines DevCo
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- Economic Council, Georgia
- Parliament of New Zealand
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- Orica Mining Services - Indonesia
- Orica Australia Pty. Ltd.
- Bukit Asam (Persero) Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- The University of Queensland
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
- Gujarat Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- Ceylon Electricity Board - Sri Lanka
- Indika Energy - Indonesia
- Jindal Steel & Power Ltd - India
- IHS Mccloskey Coal Group - USA
- Bharathi Cement Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining Corp, Philippines
- Thiess Contractors Indonesia
- Coastal Gujarat Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Edison Trading Spa - Italy
- Chamber of Mines of South Africa
- PTC India Limited - India
- Mercuria Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- Bhushan Steel Limited - India
- SMG Consultants - Indonesia
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Ministry of Finance - Indonesia
- Eastern Coal Council - USA
- Directorate General of MIneral and Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- Bukit Makmur.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Larsen & Toubro Limited - India
- Meralco Power Generation, Philippines
- Xindia Steels Limited - India
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Simpson Spence & Young - Indonesia
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Price Waterhouse Coopers - Russia
- TNB Fuel Sdn Bhd - Malaysia
- Agrawal Coal Company - India
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- Deloitte Consulting - India
- GAC Shipping (India) Pvt Ltd
- Siam City Cement - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate Of Revenue Intelligence - India
- Therma Luzon, Inc, Philippines
- Altura Mining Limited, Indonesia
- The Treasury - Australian Government
- Sree Jayajothi Cements Limited - India
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- GN Power Mariveles Coal Plant, Philippines
- Ind-Barath Power Infra Limited - India
- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Commodity Traders Exchange
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Neyveli Lignite Corporation Ltd, - India
- White Energy Company Limited
- Miang Besar Coal Terminal - Indonesia
- Malabar Cements Ltd - India
- Coal and Oil Company - UAE
- Bhatia International Limited - India
- Kaltim Prima Coal - Indonesia
- Ministry of Mines - Canada
- OPG Power Generation Pvt Ltd - India
- Sojitz Corporation - Japan
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- Formosa Plastics Group - Taiwan
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- McConnell Dowell - Australia
- ICICI Bank Limited - India
- Timah Investasi Mineral - Indoneisa
- Indian Energy Exchange, India
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Mjunction Services Limited - India
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- European Bulk Services B.V. - Netherlands
- Baramulti Group, Indonesia
- Attock Cement Pakistan Limited
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- Marubeni Corporation - India
- Grasim Industreis Ltd - India
- ASAPP Information Group - India
- Toyota Tsusho Corporation, Japan
- Aboitiz Power Corporation - Philippines
- Tamil Nadu electricity Board
- Billiton Holdings Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Central Electricity Authority - India
- Rashtriya Ispat Nigam Limited - India
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