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