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The Effect of Fuel Mix, Moderated by Indonesia Crude Price and Foreign Exchange, and Power Losses on Profitability of PT PlN (PERSERO)

Author

Listed:
  • Ahmad Rofik

    (Master of Management, Economic and Business Faculty, Esa Unggul University-Jakarta, Indonesia.)

  • Tantri Yanuar Rahmat Syah

    (Master of Management, Economic and Business Faculty, Esa Unggul University-Jakarta, Indonesia.)

Abstract

Like any other corporate, state owned enterprises (SOE) main objective is to achieve optimum profit to ensure its sustainability. In Indonesia, electricity business in run by PT PLN (Persero), a corporate owned 100% by Government of Indonesia. Thus, PLN should maximize its effort on cost reduction and sales volume optimization to ensure its profitability growth. Looking at the structure of operational cost and revenue, this study aims to explore the effect of fuel mix and power losses on profitability (operating profit/loss) of PLN, where the moderating role of Indonesia crude price (ICP) and exchange rate on fuel mix effect toward profitability also take into account. By using moderated regression analysis (MRA), this study found out that the effect of fuel mix on profitability, and power losses on PLN s profitability exist negatively. ICP and exchange rate also strengthen the effect of fuel mix on PLN s profitability. This study suggested PLN to continue exploring ways to optimize its fuel mix and power losses, as well as increasing sales volume. This could not be done without Government intervention that favors PLN i.e., tariff adjustment or incentives, especially when exchange rate and ICP value worsen. This is to ensure that PLN has a healthy financial sustainability.

Suggested Citation

  • Ahmad Rofik & Tantri Yanuar Rahmat Syah, 2020. "The Effect of Fuel Mix, Moderated by Indonesia Crude Price and Foreign Exchange, and Power Losses on Profitability of PT PlN (PERSERO)," International Journal of Energy Economics and Policy, Econjournals, vol. 10(4), pages 377-383.
    • Handle: RePEc:eco:journ2:2020-04-47
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    References listed on IDEAS

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    More about this item

    Keywords

    PT PLN (Persero); Electricity Tariff; Fuel Mix; Indonesia Crude Price ; Exchange Rate; Power Losses; Profitability;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other

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