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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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Wednesday, 20 October 21
MARKET INSIGHT - INTERMODAL
IMO 2020, Ballast Water Treatment regulations, Green Recycling, GHG emissions, EEXI, CII, ETS, Fit for 55, Carbon price/levy, the Poseidon Principl ...
Tuesday, 19 October 21
SPONGE IRON SECTOR MIGHT REPORT NEGATIVE GROWTH DUE TO COAL CRISIS: SIMA - PTI
The domestic sponge iron industry might report a negative growth in the ongoing December quarter “if the shortage of coal is allowed to conti ...
Tuesday, 19 October 21
COAL INDIA, THE FALL GUY FOR POWER CRISIS - INDIA EXPRESS
The post-Covid economic recovery has led to a major increase in the demand for power, both in India and globally. In India, coal-based power plants ...
Saturday, 16 October 21
SOLAR INSTALLATION SURGE PUTS INDIA ON TRACK TO CAP COAL-FIRED POWER AS EARLY AS 2024 - IEEFA
Recent increase in solar power installations could push coal to peak sooner than expected
If India keeps installing solar capacity a ...
Saturday, 16 October 21
DESPITE HIGHER COAL PRICES, U.S. COAL RECOVERY LOOKS WEAK BY MOST MEASURES - IEEFA
U.S. coal sector is locked into a long-term sectoral decline
Coal prices have surged to the highest level in years in the U.S., and have soare ...
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- Sinarmas Energy and Mining - Indonesia
- Australian Commodity Traders Exchange
- ASAPP Information Group - India
- Metalloyd Limited - United Kingdom
- Planning Commission, India
- Karaikal Port Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
- Wilmar Investment Holdings
- Aditya Birla Group - India
- Aboitiz Power Corporation - Philippines
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- Grasim Industreis Ltd - India
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Sree Jayajothi Cements Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- OPG Power Generation Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Vizag Seaport Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Posco Energy - South Korea
- Mintek Dendrill Indonesia
- Chamber of Mines of South Africa
- Billiton Holdings Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- MS Steel International - UAE
- Agrawal Coal Company - India
- Sarangani Energy Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- The Treasury - Australian Government
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Deloitte Consulting - India
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- Central Electricity Authority - India
- Barasentosa Lestari - Indonesia
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- Directorate Of Revenue Intelligence - India
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- Chettinad Cement Corporation Ltd - India
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Generating Authority of Thailand
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- Standard Chartered Bank - UAE
- ICICI Bank Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Uttam Galva Steels Limited - India
- The University of Queensland
- The State Trading Corporation of India Ltd
- Minerals Council of Australia
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- VISA Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Gujarat Sidhee Cement - India
- Goldman Sachs - Singapore
- Baramulti Group, Indonesia
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Globalindo Alam Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- McConnell Dowell - Australia
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Marubeni Corporation - India
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- GN Power Mariveles Coal Plant, Philippines
- Miang Besar Coal Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wood Mackenzie - Singapore
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- CNBM International Corporation - China
- Mjunction Services Limited - India
- SMC Global Power, Philippines
- Romanian Commodities Exchange
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- Formosa Plastics Group - Taiwan
- International Coal Ventures Pvt Ltd - India
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- Bangladesh Power Developement Board
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- PTC India Limited - India
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- Ministry of Transport, Egypt
- Edison Trading Spa - Italy
- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- Central Java Power - Indonesia
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Makarim & Taira - Indonesia
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Semirara Mining Corp, Philippines
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- Power Finance Corporation Ltd., India
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- PowerSource Philippines DevCo
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