ICMA: Miners pull out from mine mouth power plant projects
Wednesday, September 14 2016 - 02:15 AM WIB
This was revealed by the Chairman of the Indonesian Coal Mining Association (ICMA) Pandju Sjahrir as reported by Bisnis Indonesia and Kontan. Pandu, however, did not disclose the reason why the investors switched from mine mouth concept to coal-fired power plant. He suggested that a number of other miners are expected to also pull out from their planned mine mouth power plant projects.
Kontan said that IDX-listed coal mining firm PT Bumi Resources Tbk has decided to cancel two mine mouth power plant projects, each with capacity of 200 MW, in East Kalimantan. Bumi, however, did not confirm the report.
The move by coal miners to pull out from mine mouth power plant projects come amid lingering dispute over the price formula used to determine the price of coal for the project, which will affect the price of electricity to be purchased by state-owned electricity firm PT PLN from the project.
Under the current Minister of Energy and Mineral Resources Regulation No 9/2016, the coal price for mine mouth power plant project is determined based on a formula of production cost plus a 15-25 percent margin. This, however, has been challenged by PLN, arguing that considering the current weak coal price, the margin is too excessive.
Director General of Mineral and Coal Bambang Gatoto Ariyono, however, insisted that mine mouth power plant projects remain attractive. He reiterated that the ministerial regulation will be revised that would allow coal price for mine mouth power plant projects to be determined based on business to business negotiation between the investors and PLN. Meanwhile, Kontan quoted PT Adaro Power and IDX-listed coal miner PT Bukit Asam Tbk as saying that they remain committed to develop their mine mouth power plant projects. (*)