Govt, Investors to discuss power prices for mine-mouth power plants
Thursday, July 14 2011 - 04:51 AM WIB
A number of mine-mouth power plant projects are in the process of being offered to investors via open tender and a price formula for such power generation can serve as reference for investors, said Nur Pamudji, PLN's Director of Primary Energy as quoted by Bisnis Indonesia.
The price formula for mine-mouth power plant should refer to production costs and attractive rate of return for investors, said Nur, adding that the government has invited a number of state-owned enterprises that involve in power projects to attend the meeting.
Previously, the Indonesian Coal Mining Association has proposed that coal prices used in mine-mouth power plants should be below the government's monthly coal price benchmark because it does not include transportation and loading-unloading costs.
"We have asked for the fairest treatment to the government," said Supriatna Suhala, the association's executive director.
Mine-mouth power plants are set up very close to coal mines which needs few efforts to transport the fuel for power generating.
The government's monthly coal benchmark is prices of thermal coal and coking coal on freight-on-board (FOB) basis. The benchmark is a monthly average of four international and local coal price indexes including the Indonesian Coal Price Index (ICI) and the globalCOAL Newcastle Index.
Lack of price reference for mine-mouth power plants have stalled development of a number of mine-mouth power plant projects including a planned 200 megawatts mine-mouth power plant by state-owned coal miner PT Tambang Batubara Bukit Asam (PTBA) in its Tanjung Enim mine in South Sumatra.
PTBA and PLN had agreed in 2008 to sell the electricity from the power plant at $3.87 cents for each kilowatt hour (kWh) but both parties could not sign the agreement, pending the government's plan to issue the new regulation on mine-mouth power plant. (*)