ICMA asks government to offer better power price margin

By Tri Subhki R

Indonesian Coal Mining Association (ICMA) asked the government to offer better power price margin for coal companies in developing mine mouth power plant.

Coal miners only consume a small amount of power that generated by a mine mouth plant and the excess power will be sold to state-owned power utility (PT PLN Persero).

"For example, a coal mine will only consume 5 to 20 MW out of a 100 MW capacity power plant," ICMA's Chairman of Commercial Committee Pandu Sjahrir said on Wednesday.

Pandu said the government should offer a fixed-price at 7 US cent per kWh for seven years, a revenue source for coal miners to pay back bank loan. "After that, government may reduce the power price," he said.

He argued the current price offer from government, which is 4 cents per kWh, is too low and gives the coal companies a zero margin. Moreover, PLN buys the power only on a yearly-contract basis instead of a long term contract, which makes a mine mouth plant project unbankable

Pandu added that ICMA's suggestion will eventually benefit the government as coal companies will borrow from state owned banks to build the plants.

Editing by Johannes Simbolon