China offers export credits for Ombilin coal project

State owned coal producer PT Tambang Batubara Bukit Asam (PTBA) has received an offer to get export credits worth up to US$62 million from China to finance the development of the company?s underground coal project in Ombilin, West Sumatra, Bisnis Indonesia reported on Monday.

PTBA?s president, Ismet Harmaini said in Jakarta over the weekend that the export credit financing was one three financing schemes that would be proposed by China National Technology Import Export Corporation (CNTIEC) in its plan to develop the Ombilin underground coal mining project.

He said CNTIEC, one of the largest coal producers in China, would offer three cooperation schemes in the development of the Ombilin coal mining.

The first option will be in the form of build, operate and transfer (BOT) under which CNTIEC will be allowed operate the coal mine for certain period of time. In this option, the Chinese will provide all of the funds needed for the development of the project.

The second option will allow PTBA to receive soft loan in the form of export credit to develop the Ombilin mine, and the third option will allow PTBA to receive commercial loan to finance the project but the Chinese company wants to become the main operator of the mine if the latest option is chosen.

PTBA hopes that the development of the underground mining would pave the way to increase coal production in Ombilin to 1.3 million tons a year from about 500 tons at present. At present, most of PTBA?s production comes from the company?s Tanjung Enim coal mine in South Sumatra. (*)