Norman Harsono, Jakarta – State-owned electricity giant PLN continues to see its profit eroded by foreign exchange losses, according to the company's financial report.
PLN's profit plummeted 96.5 percent year-on-year (yoy) to Rp 251.6 billion (US$17.4 million) in the first half of the year, down from Rp 7.3 trillion in the same period last year.
Indonesia's sole electricity distributor booked Rp 139.8 trillion in revenue in the first half, a modest increase of 1.6 percent yoy, because power consumption growth was dampened by large-scale social restrictions (PSBB) to contain the coronavirus in many Indonesian cities as businesses shut down or halted operations.
The fall in profit was largely caused by foreign exchange losses that cost the company Rp 7.8 trillion from January to June, due to the depreciation of the rupiah against the US dollar. Despite a significant recovery from its low of Rp 16,575 in March, the rupiah remained weaker than usual in the first half of the year, hovering just above Rp 14,000 against the greenback.
PLN spokesman Agung Murdifi said on Tuesday night that the company had conducted cost-saving measures to cut its expenses.
"We have moved ahead with efficiency measures in operating expenses, particularly by cutting fuel use," he said in a statement.
PLN's operating costs dropped 1.7 percent yoy to Rp 149.9 trillion in the first half of the year. The financial report shows that PLN slashed its fuel spending by 15.5 percent yoy to Rp 56 trillion in the January-to-June period, while its overall personnel expenses were down 19.8 percent as it cut employee incentives and bonuses by more than half.
Agung added that the addition of 3.59 million new customers had also contributed to the company's revenue over the past six months, raising its customer base to 77.19 million.
PLN's income also includes Rp 3.3 trillion in compensation from the government for a three-month COVID-19 electricity relief program kicked off in April to aid 31 million of Indonesia's poorest households during the pandemic. The government still owes PLN Rp 1.9 trillion for executing the program.
Meanwhile, the PLN workers union maintained that, despite the losses and the slashed employee budget, the company would not conduct any layoffs.
"We've talked to the directors about PLN's transformation. There will be no layoffs, they said," PLN workers union head Abrar Ali told The Jakarta Post on Wednesday.
Meanwhile, despite rising financial strain, the company's payments to independent power producers (IPPs) rose by 21 percent yoy to Rp 49.95 trillion in the first semester with new plants launching operations.
PLN's spokesman said the company had added 1,285 megawatts worth of new power plants and 950,9 circuit kilometers of new power lines as of June.
PLN guaranteed buying power for purchasing from IPP-owned coal plants to incentivize electrification, at the behest of the government. However, the incentive has become a burden for PLN, as the electricity company struggles to sell the electricity.
PLN's obligation to buy minimum amounts of power from IPPs will become a major financial burden over the next five years, exceeding its own fuel spending by 2021, according to an Institute for Energy Economics and Financial Analysis (IEEFA) study.
"It is crucial that PLN and the government change their planning and management of Indonesia's electricity system." IEEFA analyst Elrika Hamdi said on June 15.
With low power demand from businesses and industries, PLN has moved to boost consumption in the only segment that saw growth in the second quarter: the residential segment.
The company launched a promotion campaign in mid-July to get more residential customers to raise their homes' power limits. More than 50,000 customers had signed up for the promotional offer, the company said on July 23.
"Industries' consumption tends to decline. If we gave them that promotion, it would not be too effective," said PLN customer management director Bob Saril on July 16 as quoted by kompas.com.