4 contractors agree to supply coal to PLN, but PLN needs more

Four coal contractors have agreed to supply coal to the troubled power plant in Suralaya, West Java, owned by state-owned electricity company PLN's subsidiary PT Indonesia Power, but the company said the supply is insufficient and it would look for coal from Australia to ensure the power plant may continue operation.

Sources said the four coal contractors -- PT Kaltim Prima Coal (KPC), PT Arutmin, PT Kideco Jaya Agung and PT Bukit Sunur -- had agreed to sell the government's share in their output to the Suralaya power plant as requested by the government.

But, the contractors turned down the government's request for them to also sell some of their output share to the power plant.

Under contracts, the country's coal contractors have to deliver 13.5 percent of their output to government in royalties and tax. Under the current practice, they sell the coal themselves and deliver the proceeds to the government after taking some fee.

The four contractors made the agreement during a meeting with director general of oil and non-tax revenue at the ministry of finance Sahala Lumban Gaol on Wednesday.

As a matter of fact, the sources said, the ministry summoned ten coal contractors to the meeting but only the four contractors came to the meeting.

It remains unclear why the other six contractors did not appear.

The meeting was aimed at solving the problem now besetting the Suralaya power plant, arising from the decrease in coal supplies to the power plant.

The Suralaya power plant, which is billed the largest power plant in South East Asia with a combined power generation capacity of 3,400 MW, accounts for 30 percent of power supplies to Java and Bali.

It needs 10 million tons of coal per year to generate power, but thus far it could only secure eight million tons of coal supplies for this year.

State owned coal company PT Bukit Asam, which in the past covered all the power plant's coal needs, has said it was only able to send six million tons of coal this year, while PT Arutmin and PT Kitadin, with which in 2000 Indonesia Power signed contracts for the purchase of four million tons of coal per year, have told the firm they were only able to supply two tons of coal this year.

Coal producers are reluctant to sell their coal to Indonesia Power because the latter quoted too low price for their power and the company has often delayed payment.

Indonesia Power's corporate secretary Lilie Charlie told Petromindo on Thursday that the Suralaya power plant was now in a critical condition as it had only one week of coal stock left.

Analysts warns that Indonesia Power could be forced to suspend the operation of some of the Suralaya power units, as such causing blackouts in many parts of Java and Bali, if the coal supply problem persists.

They said the new coal supplies promised by KPC, Kitadin, Bukit Sunur and Kideco would be less than enough to cover the shortfall in Suralaya's coal needs.

Data at the ministry of energy and mineral resources indicates that the four companies produce a combined 2.56 million tons of coal per month. The government's share in the output, which they have promised to supply to Suralaya, is estimated at 345,000 tons per month.

In comparison, the Suralaya power plant consumes about 30,000 tons of coal per day or about 900,000 tons per month.

Lilie said Indonesia Power had decided to look for alternative coal suppliers, which are able to supply cheap coal to the company.

Indonesia Power set its buying price for coal at Rp 150,000 or about $15 per ton as against the international price of between $27 and $28. (Alex)