IDEAS home Printed from https://ideas.repec.org/a/eco/journ2/2020-04-47.html
   My bibliography  Save this article

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
    as

    Download full text from publisher

    File URL: https://www.econjournals.com/index.php/ijeep/article/download/9575/5144
    Download Restriction: no
    File URL: https://www.econjournals.com/index.php/ijeep/article/view/9575/5144
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sapto Jumono & Sugiyanto & Chajar-Matari Fath Mala, 2019. "Determinants of Profitability in Banking Industry: A Case Study of Indonesia," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(1), pages 91-108, January.
    2. Serkan Yilmaz Kandir & Ahmet Erismis & Ilhan Ozturk, 2015. "Investigating Exchange Rate Exposure of Energy Firms: Evidence from Turkey," Prague Economic Papers, Prague University of Economics and Business, vol. 2015(6), pages 729-743.
    3. Jamil, Faisal, 2013. "On the electricity shortage, price and electricity theft nexus," Energy Policy, Elsevier, vol. 54(C), pages 267-272.
    4. repec:prg:jnlpep:v:preprint:id:532:p:1-15 is not listed on IDEAS
    5. Baum, Christopher F. & Caglayan, Mustafa & Barkoulas, John T., 2001. "Exchange Rate Uncertainty and Firm Profitability," Journal of Macroeconomics, Elsevier, vol. 23(4), pages 565-576, October.
    6. Sapto Jumono & Abdurrahman & Chajar Matari Fath Mala, 2017. "Market Concentration Index and Performance: Evidence from Indonesian Banking Industry," International Journal of Economics and Financial Issues, Econjournals, vol. 7(2), pages 249-258.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bhumika Gupta & Salil K. Sen, 2019. "Carbon Capture Usage and Storage with Scale-up: Energy Finance through Bricolage Deploying the Co-integration Methodology," International Journal of Energy Economics and Policy, Econjournals, vol. 9(6), pages 146-153.
    2. Bagella, Michele & Becchetti, Leonardo & Hasan, Iftekhar, 2004. "The anticipated and concurring effects of the EMU: exchange rate volatility, institutions and growth," Journal of International Money and Finance, Elsevier, vol. 23(7-8), pages 1053-1080.
    3. Michele Bagella & Leonardo Becchetti & Iftekhar Hasan, 2004. "The Anticipated and Concurring Effects of the EMU," CEIS Research Paper 55, Tor Vergata University, CEIS.
    4. Bernard Njindan Iyke & Sin‐Yu Ho, 2020. "Consumption and exchange rate uncertainty: Evidence from selected Asian countries," The World Economy, Wiley Blackwell, vol. 43(9), pages 2437-2462, September.
    5. Joseph P. Byrne & E. Philip Davis, 2005. "Investment and Uncertainty in the G7," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(1), pages 1-32, April.
    6. Huang, Alex YiHou & Peng, Sheng-Pen & Li, Fangjhy & Ke, Ching-Jie, 2011. "Volatility forecasting of exchange rate by quantile regression," International Review of Economics & Finance, Elsevier, vol. 20(4), pages 591-606, October.
    7. Fahad Bin Abdullah & Rizwan Iqbal & Falak Shad Memon & Sadique Ahmad & Mohammed A. El-Affendi, 2023. "Advancing Sustainability in the Power Distribution Industry: An Integrated Framework Analysis," Sustainability, MDPI, vol. 15(10), pages 1-28, May.
    8. Guglielmo Maria Caporale & Luis Gil‐Alana, 2020. "Prospects for a Monetary Union in the East Africa Community: Some Empirical Evidence," South African Journal of Economics, Economic Society of South Africa, vol. 88(2), pages 174-185, June.
    9. Laborde, David & Rey, Serge, 2001. "Transmission internationale de la volatilité des prix d’actifs financiers : les relations entre les marchés français et américains de 1997 à 2000 [Volatility and cross correlation across asset mark," MPRA Paper 30284, University Library of Munich, Germany.
    10. Mertzanis, Charilaos & Garas, Samy & Abdel-Maksoud, Ahmed, 2020. "Integrity of financial information and firms' access to energy in developing countries," Energy Economics, Elsevier, vol. 92(C).
    11. Bajo-Buenestado, Raúl, 2021. "The effect of blackouts on household electrification status: Evidence from Kenya," Energy Economics, Elsevier, vol. 94(C).
    12. Bhumika Gupta & Salil K. Sen, 2019. "Carbon capture usage and storage with scale-up : energy finance through bricolage deploying the co-integration methodology," Post-Print hal-02559884, HAL.
    13. Ejaz Gul & Imran Sharif Chaudhry, 2016. "Socio-Economic Analysis of Household Energy Security: Evidence from 3D Energy Losses Surface Maps (ELSMs)of a Town Using Conjuncture of Factors Matrix, Digital and Mathematical Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 55(4), pages 1019-1041.
    14. Irandoust, Manuchehr, 2019. "On the relation between exchange rates and tourism demand: A nonlinear and asymmetric analysis," The Journal of Economic Asymmetries, Elsevier, vol. 20(C).
    15. Shawuya Jigeer & Ekaterina Koroleva, 2023. "The Determinants of Profitability in the City Commercial Banks: Case of China," Risks, MDPI, vol. 11(3), pages 1-21, March.
    16. Raphael A. Auer, 2015. "Exchange Rate Pass‐Through, Domestic Competition, and Inflation: Evidence from the 2005–08 Revaluation of the Renminbi," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(8), pages 1617-1650, December.
    17. Jamil, Faisal & Ahmad, Eatzaz, 2019. "Policy considerations for limiting electricity theft in the developing countries," Energy Policy, Elsevier, vol. 129(C), pages 452-458.
    18. Guneratne Banda Wickremasinghe & Param Silvapulle, 2004. "Role of Exchange Rate Volatility in Exchange Rate Pass-Through to Import Prices: Some Evidence from Japan," International Finance 0406006, University Library of Munich, Germany.
    19. Niu, Wen-jing & Feng, Zhong-kai & Cheng, Chun-tian, 2018. "Optimization of variable-head hydropower system operation considering power shortage aspect with quadratic programming and successive approximation," Energy, Elsevier, vol. 143(C), pages 1020-1028.
    20. Jamal Bouoiyour & Serge Rey, 2005. "Exchange Rate Regime, Real Exchange Rate, Trade Flows and Foreign Direct Investments: The Case of Morocco," African Development Review, African Development Bank, vol. 17(2), pages 302-334.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ2:2020-04-47. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.