Advisory Services to Assess Forex Impacts on PLN’s Financial Condition

Castlerock developed a financial model to PLN with the following features and components, and analyzed the impact of future exchange rate and macroeconomic scenarios on PLN’s financial condition:

• The model calculates PLN EBITDA as a proxy for the Government of Indonesia’s subsidy obligation to PLN. Running the model for actual data for 3 years yields results  ±5% of the subsidy actually paid or budgeted by the Government of Indonesia.
• Scenarios for future exchange rates based on a model of changes in IDR and USD purchasing power parity as well as stress tests;
• An independent, statistically significant load forecast model with electricity price and GDP as inputs;
• A model to determine tariff adjustments based on scenarios of GDP growth;
• A module to adjust PLN’s capacity expansion plan to ensure  supply and demand balance;
• A proforma income statement for PLN linked to external parameters that calculates fuel costs, power purchases from IPPs (as a proxy for ISAK 8 treatment of IPP purchase costs), maintenance costs, employee costs, lease costs, interest (including detailed modelling of all debt service obligations), depreciation and other expenses