BPK questions policy requiring low rank coal for power plant projects

The Supreme Audit Agency (BPK) has sent a letter to the Ministry of Energy and Mineral Resources and state-owned electricity firm PLN in connection with the policy to require the use of low rank coal with calorific value of 3,000 kcal/kg in the South Sumatra 9 and 10 mine-mouth coal fired power plant projects, Kontan reported on Monday.

The paper quoted BPK senior auditor Arief Senjaya as saying that the agency was questioning the impact of the policy on production cost and state electricity subsidiary.

As previously reported by this portal on July 26, PLN will require the winning bidders of the 2x600 MW South Sumatra 9 and 600 MW South Sumatra 10 power plant projects to use coal with CV of 3,000 kcal/kg in the projects.

PLN President Director Murtaqi Syamsuddin said that the requirement was in line with the stipulation in the Minister of Energy and Mineral Resources Regulation No 10/2014, and the huge supply of the low rank coal in South Sumatra.

There are concerns, however, that forcing the power plant developers to use the 3,000 kcal/kg coal would inflate the production cost as it would be cheaper if the plants use coal with higher CV, for instance the 4,000 kcal/kg coal. (*)