Indonesia Power denies buying from illegal coal producers

Indonesia Power, a subsidiary of state owned electricity company PLN, has denied that the company has bought coal from illegal coal producers saying that it purchased from the spot market if the supply from existing suppliers was not enough to meet the coal needs of its Suralaya steam power plant, Bisnis Indonesia reported on Thursday.

In a press statement, IP said that the company buys its coal from South Sumatra-based coal mining company PT Batubara Bukit Asam under long-term purchase contracts and from PT Adaro Indonesia, Kideco Jaya Agung and Berau Coal under medium-term contracts.

"If the supply from these companies was interrupted, Indonesia Power bought from PT KB through the spot market," it said.

Earlier reports accused Indonesia Power to buy coal from illegal sources. The reports said that 10 of the company?s coal suppliers were not included in the list of 16 coal producers recommended by the Ministry of Energy and Mineral Resources. Coal producers which were not included in the list were believed to be producing their coal from illegal mining areas. To be included in the list the coal producers should first bring coal samples to ensure that the coal is produced from licensed concession areas. (*)