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