JAKARTA (TheInsiderStories) – Indonesian state-owned electricity company PT Perusahaan Listrik Negara (PLN) posted a net profit of Rp7.35 trillion (US$517.6 million) in June 2019, said the management on a written statement today (09/23). The profit was inversely from the same period last year which lost Rp5.35 trillion.
PLN’s finance director Sarwono Sudarto said the profit came from electricity sales which grew 4.95 percent to Rp133.45 trillion as of June 2019. Sales growth came from electricity sales volume which increases by 4.41 percent to 118.52 Terra Watt hours (TWh).
The increase in electricity volume consumption is also supported by the increasing numbers of customers, which until the end of June 2019 has reached 73.62 million.
“The increase in the number of customers has pushed up the national electrification ratio from 98.3 percent at the end of 2018 to 98.81 percent at the end of June 2019,” he explained.
Another factor that boosted profit growth, Sudarto said, was the strengthening of the rupiah against the United States (US) dollar and the euro, where most of the long-term loans obtained by companies in the form of US dollars.
“The strengthening of the rupiah exchange rate has a positive impact on PLN’s business results, which PLN posted a foreign exchange gain in June 2019 of Rp5.04 trillion,” he said.
Despite increased sales, the company’s operating expenses rose 7.08 percent from Rp142.43 trillion in the same period last year to Rp152.51 trillion. The business cost component with the largest increase came from the burden of private electricity purchases, which was 9.52 percent to Rp41.4 trillion.
The increase in electricity purchase costs occurred along with the entry of several Independent Power Producers (IPPs) to supply power to PLN. Meanwhile, fuel costs dominate 43 percent of the total operating costs, with gas being the largest fuel cost, even though electricity output only contributes 22 percent.
Sudarto said that the company also continues the efficiency of operations by reducing the consumption of fuel oil for the PLN power plant and replacing it with biofuel, as well as increasing electricity supply from other plants with lower operating costs. The efficiency of operations is carried out considering that until now the government has persisted in not raising electricity tariffs.
Previously, PLN had managed to raise funds of up to Rp5.71 trillion that come from the issuance of Japanese and rupiah-denominated bonds. Firstly, the company managed to issue bonds denominated in Japanese Yen or Samurai Bonds valued at ¥23.2 billion or equivalent to Rp3 trillion. Furthermore, the company will also offer bonds and Sukuk up to Rp2.71 trillion.
The issuance of Samurai Bonds is the first time for PLN. The company appointed four banks as joint leads, Mizuho Bank Ltd, Morgan Stanley, Nomura, and SMBC Nikko. The bidding process has been officially carried out since 6 September 2019.
PLN’s Samurai Bonds are issued in three series, with ¥3.7 billion maturing in 2022 with a final coupon of 0.43 percent, then ¥18.5 billion maturing in 2024 with a coupon of 0.87 percent and ¥1 billion maturing in 2029 with a coupon of 1.05 percent.
The majority of investors who absorb three-year bonds are asset management groups and cooperative banks. While life insurance and nonlife insurance investors prefer to the five-year tenor series. Then, cooperative banks buy the 10-year tenor series.
The PLN Samurai Bonds issuance action is not only considered to make the company have more diversified investors but also has the potential to have strong ties with foreign investors.
PLN will conduct a Public offering III Phase V in 2019 valued at Rp1.91 trillion. These bonds are offered in five series, namely series A worth Rp 795.7 billion with a fixed interest rate of 7.90 percent per year, which has a term of five years.
Then, series B worth of Rp445 billion with a fixed interest rate of 8.40 percent per year, which has a term of 7 years. Series C is valued at Rp6.2 billion with a fixed interest rate of 8.6 percent per annum, with a term of 10 years.
Furthermore, the D series worth Rp166 billion with a fixed interest rate of 9.4 percent per year, which has a term of 15 years. Finally, E series worth Rp500 billion with a fixed interest rate of 9.9 percent per year, with a term of 20 years.
Along with this bond, PLN also offers Phase V Sustainable Sukuk Ijarah III worth Rp797.5 billion. These bonds also consist of five series, with a tenor of five years, seven years, 10 years, fifteen years and 20 years. Each has the remaining amount of compensation of Rp6.5 billion, Rp10 billion, Rp92 billion, Rp135 billion and Rp554 billion.
PLN will absorb the proceeds of the bond issuance for investment activities in power plants or transmission and distribution networks in Sumatra, Java, Bali, Nusa Tenggara, Kalimantan, Sulawesi, Maluku, and Papua.
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