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