Competition among coal miners to rise as role of coal-fired power plants to decline

Competition among coal miners in the domestic market is set to rise in the future as the contribution of coal-fired power plants under the recently approved 2016-2025 electricity procurement business plan (or RUPTL) of state-owned electricity firm PT PLN has been reduced.

According to the 2016-2025 RUPTL, the contribution of coal-fired power plants is projected to reach only 43.2 percent, or 34.8 GW, of the total 80.53 GW of planned new capacity. In comparison, under the previous 2015-2024 RUPTL, the contribution of coal-fired power plants was set at 59.8 percent of the total, or equal to 42.1 GW.

Hendra Sinadia, Deputy Director of the Indonesia Coal Mining Association (ICMA), said that the reduction in the contribution of coal-fired power plants in the new RUPTL will increase competition among coal miners at home, which would force miners to continue turn to the export market.

He added that this will in turn increase supply in the global market, but would not provide significant effect the price of the commodity.

Meanwhile, Kontan quoted Ministry of Energy and Mineral Resources Spokesman Sujatmiko as saying that the move to reduce the contribution of coal-fired power plants will increase the role of cleaner gas in the country?s electricity sector.

Corporate Secretary of IDX-listed coal giant PT Bukit Asam Tbk Adib Ubaidillah was quoted by the paper as saying that the declining role of coal-fired power plants would not provide much impact on company coal sales as it has secured long-term commitment from domestic buyers and that the company will continue to seek export markets. (*)