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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, 13 October 21
FBX INDEX: THE IMPOSSIBILITY OF SHORT-TERM FORECASTING - LARS JENSEN
Will freight rates on Asia-Europe or the Transpacific reach 40.000 USD/FFE in the run-up prior to Chinese New Year 2022? Or will they start droppin ...
Wednesday, 13 October 21
CHINA FLOODS: COAL PRICE HITS FRESH HIGH AS MINES SHUT - BBC
The price of coal used in China’s power plants has surged to a new record high as another of the country’s key mining regions is hit by ...
Tuesday, 12 October 21
BUMA SIGNS CONDITIONAL AGREEMENT FOR AUSTRALIAN ASSET ACQUISITION
PT Tbk. announced that its subsidiary, PT Bukit Makmur Mandiri Utama, through its newly incorporated Australian subsidiary, BUMA International Pty ...
Tuesday, 12 October 21
INDONESIA'S COAL-BASED POWER PLANTS ARE SUBJECT TO CARBON TAX NEXT YEAR, ELECTRICITY COSTS COULD RISE! - CNBC
The Indonesian government is planning plans to implement a carbon tax of IDR 30 per kilogram (kg) of carbon dioxide equivalent (CO2e) or equivalent ...
Monday, 11 October 21
COAL ABANDONMENT IN POWER GENERATION PROMOTED GAS DEMAND GROWTH IN EUROPE - TOP MANAGER: TASS
Accelerated abandonment of coal in power generation and the overall recovery of economic activity facilitated gas demand growth in Europe and led t ...
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- Kalimantan Lumbung Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Billiton Holdings Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- Miang Besar Coal Terminal - Indonesia
- Grasim Industreis Ltd - India
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- Indonesian Coal Mining Association
- Global Business Power Corporation, Philippines
- Renaissance Capital - South Africa
- Interocean Group of Companies - India
- Mercator Lines Limited - India
- Agrawal Coal Company - India
- Simpson Spence & Young - Indonesia
- GVK Power & Infra Limited - India
- Antam Resourcindo - Indonesia
- Energy Development Corp, Philippines
- PTC India Limited - India
- Heidelberg Cement - Germany
- Merrill Lynch Commodities Europe
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Commonwealth Bank - Australia
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- Neyveli Lignite Corporation Ltd, - India
- Karaikal Port Pvt Ltd - India
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- White Energy Company Limited
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- Bhoruka Overseas - Indonesia
- Wilmar Investment Holdings
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- The State Trading Corporation of India Ltd
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Bhatia International Limited - India
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- Bhushan Steel Limited - India
- Coal and Oil Company - UAE
- Sical Logistics Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- Riau Bara Harum - Indonesia
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- Minerals Council of Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Larsen & Toubro Limited - India
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- Krishnapatnam Port Company Ltd. - India
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- Rio Tinto Coal - Australia
- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
- Carbofer General Trading SA - India
- Thai Mozambique Logistica
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- Australian Coal Association
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- Karbindo Abesyapradhi - Indoneisa
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bulk Trading Sa - Switzerland
- London Commodity Brokers - England
- Makarim & Taira - Indonesia
- Kideco Jaya Agung - Indonesia
- Iligan Light & Power Inc, Philippines
- Aditya Birla Group - India
- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- Africa Commodities Group - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indogreen Group - Indonesia
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- VISA Power Limited - India
- IHS Mccloskey Coal Group - USA
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- PNOC Exploration Corporation - Philippines
- New Zealand Coal & Carbon
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thiess Contractors Indonesia
- Videocon Industries ltd - India
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- San Jose City I Power Corp, Philippines
- Dalmia Cement Bharat India
- Planning Commission, India
- Singapore Mercantile Exchange
- Tata Chemicals Ltd - India
- Chettinad Cement Corporation Ltd - India
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- Australian Commodity Traders Exchange
- Ministry of Finance - Indonesia
- Star Paper Mills Limited - India
- Madhucon Powers Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Alfred C Toepfer International GmbH - Germany
- The University of Queensland
- Electricity Generating Authority of Thailand
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- Trasteel International SA, Italy
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Kartika Selabumi Mining - Indonesia
- Anglo American - United Kingdom
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- Kumho Petrochemical, South Korea
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Vedanta Resources Plc - India
- Latin American Coal - Colombia
- Mintek Dendrill Indonesia
- Ministry of Mines - Canada
- European Bulk Services B.V. - Netherlands
- CNBM International Corporation - China
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
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