Fundamental problems hamper Kalimantan coal supply to Suralaya

Despite government?s appeal to increase supply to coal-short Suralaya power plant, Kalimantan producers found it difficult to increase supply unless Indonesia Power, the power plant?s operator, makes several significant improvements, an official said Thursday.

?One of the critical headache to increase supply to is low unloading rate at Suralaya. Suralaya?s unloading facilities are operating far below capacity of 15,000 tons per day. It means, one coal vessels with 45,000 tons of coal would need more than three days to unload, without additional charge. It would create long queue if additional shipment are made,? said Jeffrey Mulyono, president director of East Kalimantan?s Berau Coal, which is contracted to supply 1 million tons of coal per year to Suralaya until 2005.

?It?s very critical that unloading rate at Suralaya be improved if Indonesia Power wants to get additional supply from Kalimantan,? said Jeffrey, who is also chairman of Indonesian Coal Mining Association (ICMA).

Indonesia Power has four unloading facilities, but only one can be used by Kalimantan coal producers, as the other three, which are dedicated to unload coal supply from PT. Tambang Batubara Bukit Asam (PTBA) require self unloading vessels.

The second problem, said Jeffrey, is Indonesia Power?s unwillingness to shoulder increasing shipping cost. ?As coal contacts to Sularalaya are on CIF basis, it would be irrational for coal producers to supply more coal without increasing the price and shoulder shipping cost increase at the same time,? said Jeffrey. ?In the name of national interest, we are willing to increase supply to Suralaya, but we are should not be asked to also shoulder shipping cost increase.? Jeffrey added that Indonesia Power had been in negotiation with shipping firm PT. Arpeni Pratama Ocean Liner to hold down the price increases, but thus far, it had not been concluded.

Indonesia Power, which operates 3,400-MW coal-fired power plant in Banten Province had been in short supply of coal, as it main coal supplier PTBA, is unable to deliver contacted tonnage of around 6.5 million tons per annum due to problems in coal transportation. The Java-Bali power grid has been on alert since Tuesday as Suralaya, the country's biggest power plant with a combined capacity of 3,400 Megawatts (MW) could not run at full capacity due to low coal supplies. At present, Suralaya only supplies 2,200 MW.

Coal delivery from PTBA's mine in Tanjung Enim, South Sumatra to Tarahan port in Lampung by train has been disrupted since December 2003 due to problems affecting the railway.

Indonesia Power has 4 million tons per annum term contract with Kalimantan Coal producers PT.Adaro Indonesia (1 million tons), PT. Kideco Jaya Agung (2 million tons) and PT. Berau Coal (1 million tons).

Indonesia Power had been scrambling to buy 1 million tons of coal to fill its empty stock, but thus far, it had not been succeeded.

Jeffrey said thus far, Indonesia Power had only secured two extra shipments of 45,000 tons each from Berau Coal and Kideco. (alex)