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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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Friday, 22 October 21
HARD COAL REMAINS AN IMPORTANT FACTOR FOR SECURITY OF SUPPLY - COAL IMPORTERS ASSOCIATION, GERMANY
- Hard coal remains an important factor for security of supply
- Increase of around 35% in hard-coal-fired power generation in the first three ...
Wednesday, 20 October 21
CHINA'S COAL SHORTAGE TO EASE IN COMING MONTHS, INDUSTRY BODY SAYS - REUTERS
China’s coal shortage will likely ease in coming months, with domestic production and imports already showing signs of picking up, a coal ind ...
Wednesday, 20 October 21
CHINA'S RAW COAL OUTPUT DROPS IN SEPTEMBER - XINHUA
China’s raw coal output dropped 0.9 percent year on year to 330 million tonnes last month, data from the National Bureau of Statistics (NBS) ...
Wednesday, 20 October 21
OVER-RELIANCE ON COAL IN OUR POWER MIX HURTING INDIA - LIVEMINT
In spite of the renewables push, coal still accounts for about 50% of India’s installed power capacity. That means a simultaneous demand and ...
Wednesday, 20 October 21
CHINA COAL HITS RECORD HIGH AMID TIGHT SUPPLIES - REUTERS
China coal prices hit a record high on Tuesday buoyed by a widening power crunch and cold weather despite Beijing’s efforts to bolster supply ...
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- European Bulk Services B.V. - Netherlands
- CNBM International Corporation - China
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
- Grasim Industreis Ltd - India
- Banpu Public Company Limited - Thailand
- Jaiprakash Power Ventures ltd
- Global Business Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- Siam City Cement PLC, Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Borneo Indobara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement - Thailand
- ASAPP Information Group - India
- Energy Development Corp, Philippines
- Ambuja Cements Ltd - India
- Goldman Sachs - Singapore
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Larsen & Toubro Limited - India
- Krishnapatnam Port Company Ltd. - India
- AsiaOL BioFuels Corp., Philippines
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Coastal Gujarat Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- The Treasury - Australian Government
- Georgia Ports Authority, United States
- Renaissance Capital - South Africa
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- Sree Jayajothi Cements Limited - India
- Medco Energi Mining Internasional
- Posco Energy - South Korea
- Barasentosa Lestari - Indonesia
- MS Steel International - UAE
- Semirara Mining and Power Corporation, Philippines
- White Energy Company Limited
- CIMB Investment Bank - Malaysia
- Pendopo Energi Batubara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Minerals Council of Australia
- SMC Global Power, Philippines
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- Jindal Steel & Power Ltd - India
- ICICI Bank Limited - India
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- Indonesian Coal Mining Association
- Meralco Power Generation, Philippines
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- Australian Commodity Traders Exchange
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- The University of Queensland
- Bhatia International Limited - India
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- Australian Coal Association
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Vizag Seaport Private Limited - India
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- Sindya Power Generating Company Private Ltd
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Straits Asia Resources Limited - Singapore
- London Commodity Brokers - England
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- San Jose City I Power Corp, Philippines
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Timah Investasi Mineral - Indoneisa
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Essar Steel Hazira Ltd - India
- New Zealand Coal & Carbon
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- Merrill Lynch Commodities Europe
- Binh Thuan Hamico - Vietnam
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- Samtan Co., Ltd - South Korea
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
- Gujarat Sidhee Cement - India
- Gujarat Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- Ministry of Finance - Indonesia
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- Heidelberg Cement - Germany
- Coal and Oil Company - UAE
- Mercator Lines Limited - India
- Leighton Contractors Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- India Bulls Power Limited - India
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Cigading International Bulk Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- IEA Clean Coal Centre - UK
- Maharashtra Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- Mjunction Services Limited - India
- Latin American Coal - Colombia
- Africa Commodities Group - South Africa
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- McConnell Dowell - Australia
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
- Altura Mining Limited, Indonesia
- Central Electricity Authority - India
- Bukit Baiduri Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Energy Link Ltd, New Zealand
- Indogreen Group - Indonesia
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- Kapuas Tunggal Persada - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Thai Mozambique Logistica
- Bhushan Steel Limited - India
- Ministry of Mines - Canada
- Edison Trading Spa - Italy
- Makarim & Taira - Indonesia
- Petron Corporation, Philippines
- Parry Sugars Refinery, India
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