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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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Friday, 24 November 23
COAL IMPORTS TO INDIA IN OCTOBER 2023 REACHED HIGHEST LEVELS IN NEARLY A YEAR AND A HALF - VESSELSVALUE, VESON NAUTICAL
In October, coal imports to India reached 13.8 mt in October 2023, according to Oceanbolt, a Veson Nautical solution, the highest level since May 2 ...
Friday, 24 November 23
COAL SHIPMENTS TO ADVANCED ECONOMIES DOWN 17% SO FAR IN 2023 - BIMCO
In the first ten months of 2023, coal shipments to advanced economies fell by 17% y/y, as demand for electricity declined and the share of electric ...
Friday, 24 November 23
INTELLIGENT COAL MINES CONTRIBUTE TO IMPROVING SAFETY STANDARDS - CHINA DAILY
Mechanization, automation and intelligent upgrades have contributed to improved safety in coal mines, though the level of development of intelligen ...
Friday, 24 November 23
WHY AUSTRALIA'S COAL MINES ARE GETTING BIGGER - IEEFA
Australia’s largest coal mines are getting larger. Mines in New South Wales (NSW) are ramping up production following the state’s recov ...
Wednesday, 22 November 23
INDIA: GOVERNMENT PLANS 1.4 BILLION TONNE COAL OUTPUT BY 2027 - LIVEMINT
The Union coal ministry on Monday announced plans to increase India’s coal production to 1.404 billion tonne by 2027, with an eye to further ...
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- European Bulk Services B.V. - Netherlands
- ICICI Bank Limited - India
- Indonesian Coal Mining Association
- Planning Commission, India
- Ind-Barath Power Infra Limited - India
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- Ambuja Cements Ltd - India
- PTC India Limited - India
- SMC Global Power, Philippines
- Aditya Birla Group - India
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- Banpu Public Company Limited - Thailand
- Bhatia International Limited - India
- The University of Queensland
- PNOC Exploration Corporation - Philippines
- Petron Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- Baramulti Group, Indonesia
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Marubeni Corporation - India
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- Maheswari Brothers Coal Limited - India
- Economic Council, Georgia
- Port Waratah Coal Services - Australia
- Gujarat Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Sical Logistics Limited - India
- Commonwealth Bank - Australia
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- Cigading International Bulk Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Global Business Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Thiess Contractors Indonesia
- GVK Power & Infra Limited - India
- Mercator Lines Limited - India
- Parry Sugars Refinery, India
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Africa Commodities Group - South Africa
- Salva Resources Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Eastern Coal Council - USA
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Coalindo Energy - Indonesia
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- Binh Thuan Hamico - Vietnam
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Georgia Ports Authority, United States
- ASAPP Information Group - India
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMG Consultants - Indonesia
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Goldman Sachs - Singapore
- Minerals Council of Australia
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- Price Waterhouse Coopers - Russia
- Posco Energy - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Kideco Jaya Agung - Indonesia
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Uttam Galva Steels Limited - India
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Global Coal Blending Company Limited - Australia
- Alfred C Toepfer International GmbH - Germany
- Indian Oil Corporation Limited
- Orica Australia Pty. Ltd.
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Barasentosa Lestari - Indonesia
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- MS Steel International - UAE
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- Meenaskhi Energy Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Thai Mozambique Logistica
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Tata Chemicals Ltd - India
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- Bayan Resources Tbk. - Indonesia
- Wood Mackenzie - Singapore
- Makarim & Taira - Indonesia
- Simpson Spence & Young - Indonesia
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- Carbofer General Trading SA - India
- Edison Trading Spa - Italy
- Merrill Lynch Commodities Europe
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Anglo American - United Kingdom
- Ministry of Mines - Canada
- Jaiprakash Power Ventures ltd
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
- Grasim Industreis Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Karaikal Port Pvt Ltd - India
- Mercuria Energy - Indonesia
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
- Wilmar Investment Holdings
- Star Paper Mills Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Sojitz Corporation - Japan
- Borneo Indobara - Indonesia
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Cement Manufacturers Association - India
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
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