In the first half of 2011, PLN generated 88 terawatt-hours (TWh). The firm generated around 24% of its output using oil-based fuel with plans to reduce the share to 3% by 2013 and 1.7% by 2014. The forecast for the full year (2011) is around 182 TWh (equivalent to around 760 kWh per capita).
At the end of 2015, PLN's total generating capacity (produced by a many different plants across Indonesia) was estimated at around 34,262 MW. Throughout 2016, PLN planned to boost its installed generation capacity by 1,932 MW.
Main indicators have been increasing along with overall economic growth in Indonesia although the growth of revenue per unit sold (Rp/kWh) has been slow:
Source: Indonesian Statistics Bureau, Statistik Indonesia (annual publication: various years), Jakarta, and Statistik PLN (annual publication; various years), Jakarta.
Read the full text
Source: Calculated from previous table. Growth = annual production growth. Capacity utilisation = kWh generated per kW of generation capacity (theoretical maximum load at 100% capacity = 8,760); calculations assume that there is 4,200 MW of generating capacity in the independent power producers which sell electricity to PLN. Labor productivity = Total GWh generated per employee in PLN. Losses = sales as a % of production.
The Indonesian Government, and the senior management of PLN, are officially committed to ongoing reforms designed to improve the efficiency of operations of the electricity supply sector in Indonesia. Performance indicators show some significant improvements in certain key measures in recent years (see previous table on Performance indicators). However, the overall reform process is often slow, hampered by the fact that the environment within which the state-owned PLN operates is closely regulated and often politicised.
Management
PLN is Indonesia's second-largest state company by assets. The top-level management, headed by the President Director, reports to a government-appointed board. The board and PLN management in turn report to the Minister of State-Owned Companies. President Directors of PLN since 1979 have been as follows:
Difficulties came to light in early 2011 over arrangements during the management period of the long-serving (2001-2008) PLN President Director Eddie Widiono Suwondho. Questions arose over certain procurement procedures which he supported. He was taken in for questioning by Indonesia's Corruption Eradication Commission in March 2011. In December 2011 he was convicted to five years in prison for charges that centred on the appointment of a company to handle the provision of outsourced services for PLN.
In mid 2019, Sofyan Basir was suspended as President Director following the decision of the Corruption Eradication Commission to indict him on a charge of corruption for his alleged role in graft relating to the construction of a power plant in the province of Riau.
Sripeni Inten Cahyani was Acting CEO for the latter part of 2019 until Zulkifli Zaini was appointed President Director in late 2019.
Policies
In late 2011, the new President Director of PLN, Nur Pamudji listed three milestones for PLN as targets for 2012:
Use, for the first time, of liquefied natural gas (LNG) as a fuel for some of PLN's generation plants
Near-finalisation of the first 10,000 MW fast-track generation program announced some years earlier
Registration of 5 million pre-paid customers into PLN distribution system.
Service
The reliability and quality of electricity supply has steadily improved in Indonesia in recent decades. Supply is more reliable in Java because the grid is relatively well-developed compared to the situation in the Outer Islands (such as Sumatra, Sulawesi and Kalimantan) where most areas are serviced by localised systems often powered by small diesel plants. However power outages are still common, even in Java. There was, for example, a particularly severe power outage in 2005 which reportedly affected around 100 million people across Java and Bali for over five hours.
Finances
PLN has—and has had, for many years—considerable trouble with internal revenue flows. For one thing, government-regulated tariffs are often too low to cover operational costs and have not been set at a level sufficient to make a reasonable contribution towards capital costs for many years. Another challenge is that there is widespread consumer resistance to payment of electricity bills and price hikes. The company's cash flow is often weighed down with overdue debts from consumers.
As just one example, in the Banyumas district (kabupaten) of Central Java in late 2011, it was reported that 60 percent (over 80,000) of PLN's 140,000 customers in the area were overdue with payments for their electricity bills causing the company over $300,000 in losses each month. Of the customers in arrears, 13,000 were considered very bad customers and were targeted for disconnection. But PLN's efforts to improve debt collection, both in Banyumas and in many other areas of Indonesia, often meet with considerable consumer resistance. In Banyumas, consumers complained that PLN's efforts to improve debt collection were unfair and failed to reflect the social obligations expected of state-owned enterprises.
Not long afterwards, PLN was involved in an incident in the Central Java city of Surakarta where the municipality had overdue bills owing of close to USD 1 million (Rp 8.9 billion) to PLN. Following PLN company policy to pursue a more aggressive approach to collect overdue bills, PLN imposed a blackout on street lamps in Surakarta just before Christmas 2011. The city municipality quickly arranged payment but also organized a protest and suggested that PLN should consider the interest of the public before taking this type of action. To reinforce the point, the mayor of Surakarta, Joko Widodo (who later became president of Indonesia), made a highly publicised personal visit to the local PLN office to deliver the Rp 8.9 billion in cash in the form of hundreds of bundles of notes and coins.
Electricity theft is common in many parts of Indonesia as well. In recent years, PLN has cracked down on non-payment of bills as well as theft. Prepaid meters are now required for all new housing units.
Apart from internal revenue flows, PLN relies on large government subsidies to support operations and, especially, capital expenditure. The average tariff for electricity at the end of 2011 was estimated to be around Rp 729 per kWh (around US 8.1 cents) while PLN's average cost of production was put at around Rp 1,100 (US 12.2 cents). The electricity subsidy provided from the national budget in 2011 was initially budgeted at Rp 65.6 trillion (around USD 8 billion at the time) but the amount increased to Rp 91 trillion (around USD 10 billion) by the end of 2011. In March 2012, the government proposed a reduction in the electricity subsidies (which involved an increase in the price of electricity to consumers) to the national parliament but the proposal was rejected. As a result, PLN came under pressure to try to find economies to reduce the ballooning subsidies. Before subsidies, in 2016 PLN made a loss of Rp 31.63 trillion.
In recent years, as economic conditions in Indonesia have improved following the 1997 Asian financial crisis, PLN has also been able to undertake significantly increased borrowing through bond issues. In November 2011, for example, PLN issued USD 1 billion of debt at reasonable market prices (10 years at 5.5% coupon value). Demand for the debt (estimated at $5.5 billion) significantly exceeded the supply of bonds on offer. In October 2012 it was reported that PLN planned to issue 30-year USD bonds which had been graded BB by Standard and Poor's rating agency. Through the issuance of debt of this kind PLN is both raising funds and participating in the development of the domestic debt market in Indonesia.
PLN also accesses other government-supported sources of financing. In December 2011 the company received a Rp 7.5 trillion soft loan (around $US800 million at the prevailing exchange rate) from the Indonesian state investment agency PIP (Pusat Investasi Pemerintah or the government investment unit, known as the Indonesia Investment Agency Archived 3 September 2012 at the Wayback Machine). The soft loan was provided for a total period of 15 years with a 5-year grace period for capital payments at a relatively low interest rate of 5.25% per annum
2021 Debt Controversies
In July 2021, the Minister of Government State-owned enterprises of Indonesia, Erick Thohir, announced that PLN had a Rp 500 trillion debt equivalent to USD 34.9 billion. The revelation of PLN's Rp 500 trillion debt sparked controversy as many considered the company may have earned a large sum of profit due to the number of people staying at home during the COVID-19 pandemic resulting in an increase in electricity usage and its payment dues.
