President Director of PLN Sofyan Basir on Wednesday (11/07) said the company recorded rising production cost by Rp1.3 trillion for every Rp100 drop in the value of the rupiah against the US dollar.
“The production cost hike reached Rp10 trillion, it [does not include additional cost] from coal, fuel, inflation,” he said, as quoted by Bisnis Indonesia.
PLN recorded Rp7 trillion potential loss in the first quarter of this year due to the rupiah depreciation, though the company saved Rp1 trillion from the government’s policy that caps coal price purchased for electricity generation by US$70 per ton.
However, PLN’s Finance Director Sarwono Sudarto said the company’s financial remains healthy. “Our operation is still good, we still record operating profit, if the exchange rate is up and down, it is not cashed out, only book value,” he added.
Sudarto said PLN has learned to manage its financial from experience last year when coal price rose while the exchange rate is stable. This year, it is the other way around, coal price stable while rupiah is falling.
Furthermore, the company has hedged 25 per cent of its foreign exchange liabilities. “We have a [hedging] policy, It is under control,” he said.
However, Sudarto added the rupiah depreciation potentially decreases the company’s net income.
The rupiah assumption against US dollar is Rp13,400 per US$1 in the 2018 state budget, however, rupiah persistently weakens in recent months and is currently at Rp14,385 per US$1.
PLN recorded Rp4.42 trillion in net income last year, significantly lower than Rp8.15 trillion in 2016 due to coal price hike. It brought significant impact to the company as coal is the energy source for 58 per cent of power plants. The production cost increased by Rp16.46 trillion due to coal price spike.
PLN’s financial condition has been in the spotlight for a long time. Last year, PLN was heavily criticized for inefficiency and accumulating debts totalling US$22 billion. The mounting debts had raised concerns from Minister of Finance Sri Mulyani Indrawati about the company’s debt servicing ability and financing capacity over the long term.
Many stakeholders had warned that PLN may suffer cash flow problems because of the mandatory 35,000 MW mega power plant over the long run. PLN will need around $10 billion for the construction of the 10,000 MW plants and for transmission under the programme.
Even so, Basir claimed PLN’S debts were still manageable. Around Rp100 trillion of debt was owed to local creditors, $1.1 billion to the World Bank and Asian Development Bank and the remainder of around Rp186 billion to various foreign creditors.