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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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Tuesday, 02 January 24
COAL TRADE CONTINUES TO HEAD EAST - BALTIC EXCHANGE
The global coal trade, once concentrated in the Pacific and Atlantic basins, is undergoing a significant transformation, as highlighted in the Inte ...
Tuesday, 02 January 24
COAL CARGOES: AVOIDING EXPLOSION AND SELF-HEATING - GARD
KNOWLEDGE TO ELEVATE
Despite its contribution to greenhouse gas emissions, global coal consumption climbed to an all-time high in 2022 and is ...
Tuesday, 02 January 24
SINOPEC FORECASTS CHINA’S COAL CONSUMPTION TO PEAK AROUND 2025 - REUTERS
China Petrochemical Corp, or Sinopec, expects coal consumption to peak around 2025 at 4.37 billion metric tons, the state energy group said in an o ...
Thursday, 07 December 23
CHINA TO SET UP COAL PRODUCTION RESERVE TO STABILISE PRICES - REUTERS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
Friday, 01 December 23
COAL MINERS GROUP EXPECTS INDONESIA’S 2023 COAL OUTPUT TO SURPASS TARGET - REUTERS
The Indonesian Coal Mining Association (ICMA) expects the country’s 2023 coal output to surpass the official target of 695 million metric ton ...
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- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The Treasury - Australian Government
- Global Coal Blending Company Limited - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- Vizag Seaport Private Limited - India
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- Chamber of Mines of South Africa
- Coal and Oil Company - UAE
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Gujarat Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Petron Corporation, Philippines
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cement Manufacturers Association - India
- GN Power Mariveles Coal Plant, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Development Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Ind-Barath Power Infra Limited - India
- Ministry of Finance - Indonesia
- Tamil Nadu electricity Board
- Interocean Group of Companies - India
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- Planning Commission, India
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- MS Steel International - UAE
- Grasim Industreis Ltd - India
- VISA Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- Tata Chemicals Ltd - India
- Marubeni Corporation - India
- Eastern Coal Council - USA
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Central Java Power - Indonesia
- Indian Oil Corporation Limited
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Bhushan Steel Limited - India
- Directorate Of Revenue Intelligence - India
- Billiton Holdings Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- Dalmia Cement Bharat India
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- Pendopo Energi Batubara - Indonesia
- Australian Coal Association
- Jaiprakash Power Ventures ltd
- Ministry of Transport, Egypt
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Videocon Industries ltd - India
- ICICI Bank Limited - India
- Simpson Spence & Young - Indonesia
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Thiess Contractors Indonesia
- Jindal Steel & Power Ltd - India
- Trasteel International SA, Italy
- Sical Logistics Limited - India
- Georgia Ports Authority, United States
- Mjunction Services Limited - India
- Bukit Makmur.PT - Indonesia
- Australian Commodity Traders Exchange
- Electricity Generating Authority of Thailand
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- ASAPP Information Group - India
- Bhatia International Limited - India
- Global Business Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Price Waterhouse Coopers - Russia
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Power Finance Corporation Ltd., India
- PTC India Limited - India
- Bharathi Cement Corporation - India
- Posco Energy - South Korea
- Singapore Mercantile Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Therma Luzon, Inc, Philippines
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Vedanta Resources Plc - India
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- Siam City Cement PLC, Thailand
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Ministry of Mines - Canada
- Siam City Cement - Thailand
- White Energy Company Limited
- Energy Link Ltd, New Zealand
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- SN Aboitiz Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- Port Waratah Coal Services - Australia
- Chettinad Cement Corporation Ltd - India
- Renaissance Capital - South Africa
- GMR Energy Limited - India
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- The State Trading Corporation of India Ltd
- Eastern Energy - Thailand
- Sojitz Corporation - Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- Altura Mining Limited, Indonesia
- Mercator Lines Limited - India
- Coalindo Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Iligan Light & Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- SMG Consultants - Indonesia
- Independent Power Producers Association of India
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- Cigading International Bulk Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
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