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