Optimum Margin for PLN to Implement Energy Transition Based on RUPTL in Order to Maintain Financial Sustainability

Abstract

The implementation of Indonesia's Electricity Supply Business Plan (RUPTL) 2025–2034 demands substantial investment to expand infrastructure and accelerate the national energy transition, while PT PLN (Persero) must simultaneously maintain affordable tariffs, financial covenant compliance, and long-term financing capacity under a cost-plus revenue model with an existing Public Service Obligation (PSO) margin of approximately 7%. This creates a strategic financing challenge, as the current margin may be insufficient to fund the planned investment program without increasing PLN's leverage or reliance on government support. This research aims to determine the minimum standalone PSO margin, assess the trade-off between margin adjustment and Penyertaan Modal Negara (PMN), and estimate PLN's executable direct investment capacity if the existing margin is maintained without additional PMN.Using a quantitative approach based on deterministic financial projections and scenario analysis, the study draws on secondary data including RUPTL projections, audited financial statements, and macroeconomic assumptions, evaluated through indicators such as Debt Service Coverage Ratio, Debt-to-EBITDA, interest-bearing debt, and funding gap, with tariffs held fixed. Results show the existing 7% margin without PMN is inadequate, causing PLN's leverage and debt-service capacity to breach acceptable thresholds. A 10% margin is identified as the minimum standalone level enabling financial sustainability without additional PMN. Higher margins reduce dependence on PMN, which is less predictable due to fiscal and political-budgetary factors. Without added PMN, PLN can execute about 87% of its direct CAPEX plan by shifting select projects to IPP financing and re-profiling disbursement schedules, though this reduces PLN's direct investment role.