FOCUS: Giant canal project may solve PTBA?s coal transportation problem

By: Robert Sihotang

State-owned coal miner PT Tambang Batubara Bukit Asam (PTBA) is struggling to solve problems in transporting its coal from Tanjung Enim mining field, Muara Enim regency, South Sumatra province. Troubles at the railway operated by state-owned railway firm PT Kereta Api Indonesia (PTKAI) has often made it difficult for the coal firm to deliver its coal to buyers.

Today, PTBA delivers most of its coal by train from Tanjung Enim either to the Tarahan coal terminal in Lampung province, about 420 kilometers (km) from Tanjung Enim, and or to the Kertapati jetty port in Palembang, about 200 km from the coalmine. From Tarahan, the coal is shipped to the Suralaya power plant complex in Banten, while from Kertapati, the coal is shipped by barges through Musi river to vessels anchored at the Bangka Straits for shipment to export markets.

Under a two-year coal transportation tariff agreement, PTKAI charges PTBA Rp 37,000 or approximately US$4.43 (US$=Rp 8,345) per ton of coal transported to Tarahan with a minimum volume of 7.05 million tons per year. Meanwhile, coal transportation fee to Kertapati is set at Rp 20,000 per tons with a minimum volume of 1.35 million tons per year.

PTBA produced 10-11 million tons of coal pear year over the past five years and this year it targets output 10.3 million. But, its huge coal reserve, which stands at 1.5 billion tons, means that the firm still has a big chance to raise its output significantly. However, according to a study by PTBA and PTKAI in 2000, the railway operated by PTKAI has a maximum transportation capacity of 14.9 million tons per year.

One possible solution that will enable PTBA to significantly raise its output is to boost the railway capacity by building a double-track railway. However, analysts say the project is too costly. A study by a French consultant estimated the cost for the construction of a double-track railway from Tanjung Enim to Tarahan at US$1.12 billion.

Therefore, PTBA is now looking for alternative solutions.

An industry source has said that there are now at least six business groups conducting feasibility studies to find the alternative solutions.

A local consortium of PT Trimitra Adiyasa and PT Transcoal Nusantara confirmed on Friday that it had completed a preliminary feasibility study for a solution. The consortium is conducting the study at the request of PTBA.

"The feasibility study will be completed soon and we will continue to study on environmental consideration (AMDAL) for this project," the consortium's business development director Cicip Hadisucipto told Petromindo.Com.

The consortium holds the right to develop the project proposed in the feasibility study once the study is completed and endorsed by PTBA.

Based on the consortium's preliminary feasibility study, there are two alternatives to transport coal from Tanjung Enim. The first is described by the consortium as ?total waterways transportation?. In this option, the consortium will build two canals measuring 140 kilometers in total. Coal from Tanjung Enim will be transported by 5,00-ton barges through a 100-km canal to Musi river. The barges will continue their trips to the Muntok port on Bangka island through two alternative ways: along Musi river or via a 40-km canal to be built linking Musi to Banyuasin river. Total distance from Tanjung Enim to Muntok via Banyuasin is 260 km, while total distance via Musi is 310 km.

The second alternative is described as ?a combination of short rail and waterways?. Coal will be first delivered through a 94-km railway to Musi river. The coal will then be carried to Muntok along Musi or through a 28-km canal to be built by the consortium linking Musi to Banyuasin. Total distance from Tanjung Enim to Muntok through Banyuasin is 282 km, while through Musi, the distance is 332 km.

"The second alternative looks more interesting (to PTBA)," Cicip said, adding that four Japanese engineering professors from Hiroshima assisted the consortium in conducting the study.

The consortium has also signed a memorandum of understanding with the Bangka-Belitung provincial government regarding the consortium's plans to build a coal terminal in Muntok.

According to the study, the Bangka Straits water is capable to accommodate 350,000-dead-weight-ton vessels or Super Cape Size vessels.

"By using Super Cape Size vessels to transport its coal, the shipment costs payable by PTBA is less US$2 - US$3 per ton compared to the costs it must pay for shipment from Tarahan," Cicip said. The Tarahan port can only accommodate 60,000-dead-weight-ton vessels.

According to Cicip, each of the projects ? the ?total waterways transportation? and ?combination of short railway and canal? ? will need around US$400 million in investment, still much lower than the $1.12 billion needed to build a double-track railway project linking Tanjung Enim to Tarahan.

"This project aims to transport up to 20 million tons of coal annually by the end of 2005 or in early 2006," Cicip said.

Once all the new transportation system is in operation, there will be some 14 barges traveling from Tanjung Enim to Muntok everyday, according to Cicip.

PTBA's president Ismet Harmaini said in a public expose on Thursday that the consortium had proposed a transportation fee of $8 per ton of coal. But PTBA wanted that the fee to be lowered to $5 per ton.

As a solution to the differences regarding the transportation, Cicip proposed PTBA be involved in the project as a partner.

"Through a joint venture, PTBA will take part in setting the transportation fee," Cicip said, adding that talks with PTBA on this project were still ongoing.

Currently, PTBA's coal output is mostly dedicated to the 3,400-megawatts (MW) Suralaya power plants in Banten and the 120-MW Tarahan power plant in Lampung, both operated by state owned utility firm PLN's unit PT Indonesia Power. PTBA has planned to build two mine mouth power plants that will consume around 4 million tons of coal per year starting in 2009.