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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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Monday, 27 September 21
CHINESE COAL FIRMS MEET TO ADDRESS WINTER SUPPLY CHALLENGES - CNBC
Major Chinese coal producers are trying to resolve supply shortages and curb price rises as the country’s winter consumption peak approaches, ...
Saturday, 25 September 21
HIGH STAKES FOR ASIAN DEVELOPMENT BANK’S AMBITIOUS COAL POWER RETIREMENT PLAN - IEEFA
Implementation challenges could block funding for other equally important high impact clean energy funding strategies
In the lead up ...
Thursday, 23 September 21
LONGER COAL CONTRACTS MAY REIN IN PRICES - ECNS
In China’s coal sector that has been marred recently by price surges, regional authorities and related enterprises should ensure the fuel con ...
Thursday, 23 September 21
BALTIC INDEX HITS 12-YEAR PEAK ON FIRMER VESSELS RATES - REUTERS
The Baltic Exchange’s main dry bulk sea freight index rose for a fourth straight session on Wednesday to a 12-year high, buoyed by higher rat ...
Thursday, 23 September 21
RECORD-HIGH GAS PRICES AFFECT MANY EUROPEAN CORPORATE SECTORS - FITCH RATINGS
Record-high natural gas prices are putting pressure on supply chains of many European corporate sectors, including non-integrated energy suppliers, ...
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- San Jose City I Power Corp, Philippines
- Price Waterhouse Coopers - Russia
- Coalindo Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- Uttam Galva Steels Limited - India
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Anglo American - United Kingdom
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- European Bulk Services B.V. - Netherlands
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- Trasteel International SA, Italy
- GMR Energy Limited - India
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Romanian Commodities Exchange
- Madhucon Powers Ltd - India
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Makmur.PT - Indonesia
- India Bulls Power Limited - India
- Thai Mozambique Logistica
- The Treasury - Australian Government
- SMG Consultants - Indonesia
- PTC India Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Indika Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- Barasentosa Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- Videocon Industries ltd - India
- Vedanta Resources Plc - India
- Latin American Coal - Colombia
- Xindia Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Commodity Traders Exchange
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- Central Electricity Authority - India
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- Sojitz Corporation - Japan
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Australian Coal Association
- Kaltim Prima Coal - Indonesia
- Parliament of New Zealand
- Rashtriya Ispat Nigam Limited - India
- Mercuria Energy - Indonesia
- Coal and Oil Company - UAE
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Directorate Of Revenue Intelligence - India
- Parry Sugars Refinery, India
- Miang Besar Coal Terminal - Indonesia
- Tata Chemicals Ltd - India
- Baramulti Group, Indonesia
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- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Attock Cement Pakistan Limited
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Larsen & Toubro Limited - India
- IEA Clean Coal Centre - UK
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- Bharathi Cement Corporation - India
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Agrawal Coal Company - India
- Bhushan Steel Limited - India
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- IHS Mccloskey Coal Group - USA
- Central Java Power - Indonesia
- VISA Power Limited - India
- Bangladesh Power Developement Board
- Sarangani Energy Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- TeaM Sual Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Port Waratah Coal Services - Australia
- Lanco Infratech Ltd - India
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Leighton Contractors Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- London Commodity Brokers - England
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Manunggal Multi Energi - Indonesia
- Energy Link Ltd, New Zealand
- The University of Queensland
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Billiton Holdings Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- Holcim Trading Pte Ltd - Singapore
- Grasim Industreis Ltd - India
- Meenaskhi Energy Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Planning Commission, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- Altura Mining Limited, Indonesia
- Metalloyd Limited - United Kingdom
- Straits Asia Resources Limited - Singapore
- Riau Bara Harum - Indonesia
- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- Economic Council, Georgia
- Kartika Selabumi Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Singapore Mercantile Exchange
- Energy Development Corp, Philippines
- Mercator Lines Limited - India
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
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- Tamil Nadu electricity Board
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- Jorong Barutama Greston.PT - Indonesia
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- Ministry of Transport, Egypt
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