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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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Saturday, 30 October 21
CHINA'S COAL PRICES SEE BIGGEST WEEKLY FALL IN MORE THAN 5 YEARS - REUTERS
China’s coal futures prices saw their biggest fall in more than five years after the powerful state planner said there is still room to adjus ...
Saturday, 30 October 21
G-20 LEADERS PREPARE STATEMENT TO STOP FUNDING FOREIGN COAL PLANTS - BLOOMBERG
Leaders of the Group of 20 wealthy economies are preparing to pledge to stop funding foreign coal-fired plants, but are still wrangling over climat ...
Friday, 29 October 21
APAC THERMAL COAL SUPPLY TO REMAIN TIGHT AS WINTER LOOMS - FITCH RATINGS
APAC thermal coal prices have surged, hitting historically high levels. The benchmark Newcastle 6,000kcal/kg grade coal reached USD228/tonne in mid ...
Thursday, 28 October 21
CANADA BAN ON SHIPPING COAL WOULD EQUAL SCRAPPING AS MANY AS 3 MILLION CARS - IEEFA
Canada ban on shipping coal would equal scrapping as many as 3 million cars
Change in Canadian policy could have major implications ...
Tuesday, 26 October 21
CHINA'S COAL-RICH SHANXI BEEFS UP COAL PRODUCTION - XINHUA
Major coal producers in north China’s Shanxi Province, a leading coal-producing region of the country, have beefed up production to ensure en ...
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- Orica Mining Services - Indonesia
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- Neyveli Lignite Corporation Ltd, - India
- Parry Sugars Refinery, India
- GN Power Mariveles Coal Plant, Philippines
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Energy Link Ltd, New Zealand
- Coastal Gujarat Power Limited - India
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Indonesian Coal Mining Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Anglo American - United Kingdom
- PTC India Limited - India
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- ICICI Bank Limited - India
- Indian Oil Corporation Limited
- London Commodity Brokers - England
- Chettinad Cement Corporation Ltd - India
- GMR Energy Limited - India
- SMC Global Power, Philippines
- Central Electricity Authority - India
- SMG Consultants - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- Australian Commodity Traders Exchange
- Riau Bara Harum - Indonesia
- Petron Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Central Java Power - Indonesia
- Kepco SPC Power Corporation, Philippines
- Ministry of Transport, Egypt
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- Kumho Petrochemical, South Korea
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Vedanta Resources Plc - India
- White Energy Company Limited
- MS Steel International - UAE
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Meenaskhi Energy Private Limited - India
- Merrill Lynch Commodities Europe
- Aditya Birla Group - India
- Simpson Spence & Young - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Metalloyd Limited - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Coal and Oil Company - UAE
- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Agrawal Coal Company - India
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Sakthi Sugars Limited - India
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- Makarim & Taira - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Jorong Barutama Greston.PT - Indonesia
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Cement Manufacturers Association - India
- CNBM International Corporation - China
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- Pipit Mutiara Jaya. PT, Indonesia
- Karaikal Port Pvt Ltd - India
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- The Treasury - Australian Government
- Wood Mackenzie - Singapore
- Intertek Mineral Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sinarmas Energy and Mining - Indonesia
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Africa Commodities Group - South Africa
- Planning Commission, India
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- Economic Council, Georgia
- Global Green Power PLC Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Goldman Sachs - Singapore
- Rio Tinto Coal - Australia
- Indian Energy Exchange, India
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Eastern Coal Council - USA
- Georgia Ports Authority, United States
- Commonwealth Bank - Australia
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Tata Chemicals Ltd - India
- Indo Tambangraya Megah - Indonesia
- CIMB Investment Bank - Malaysia
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
- Mjunction Services Limited - India
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Toyota Tsusho Corporation, Japan
- Alfred C Toepfer International GmbH - Germany
- Samtan Co., Ltd - South Korea
- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- IHS Mccloskey Coal Group - USA
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sojitz Corporation - Japan
- ASAPP Information Group - India
- Romanian Commodities Exchange
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- Mercator Lines Limited - India
- Ambuja Cements Ltd - India
- Mintek Dendrill Indonesia
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Interocean Group of Companies - India
- Heidelberg Cement - Germany
- San Jose City I Power Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Straits Asia Resources Limited - Singapore
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