Indonesia Power may cut coal purchase from PTBA over price dispute
Tuesday, June 27 2006 - 01:22 PM WIB
IP?s President Director Abimanyu Suyoso said the company would next week invite interested companied to tender for contracts to supply 5 million tons of coal for the firm?s power plant ? a need that was initially expected to be supplied by PTBA.
?Next week, we?ll tender 5-million coal supply contracts -- that is the supplies for this year ? because PTBA might cut its supply to Suralaya. Thus, PTBA?s supplies would not be as much as last year, because it (PTBA) said it was only able to supply 2.5 million tons,? Abimanyu said.
PTBA has become the largest coal supplier to IP?s Suralaya power plant in Banten, the country?s largest coal fired power plant complex with an installed capacity of 3,400 Megawatt (MW). PTBA sold 9.67 million tons of coal last year, about 75 percent of which to Suralaya.
Thus, any decision by IP to give the 5-million supply contract to other companies will deal a heavy blow to PTBA, which is listed on the Jakarta Stock Exchange.
According to Abimanyu, IP decided to offer the 5-million supply contract to other companies following PTBA?s proposal to raise the price of its coal.
PTBA has proposed to increase the price to between Rp 374,000 and Rp 384,000 per ton from Rp 272,000 per ton last year, as it has now to pay higher fee to state owned railway company PT Kereta Api Indonesia for the use of the latter?s railway to transport its coal from South Sumatra to the seaport on the southern tip of Sumatra.
IP however considered the price proposal ?too expensive?.
?The maximum price that we can pay is Rp 320,000 per ton. If we pay above the price, we could be jailed,? Abimanyu said.
Meanwhile, PTBA insisted on Tuesday that IP had to pay higher for their coal.
?We still ask PT Indonesia Power to pay our coal supply to Suralaya at Rp 374,000 and Rp 384,000 per ton. We set the price after taking into account the transportation fee and the profit margin that we expect to gain,? PTBA?s operational director Sukrisno told Petromindo.Com.
He denied that PTBA was unable to supply another 5 million tons of coal to IP.
?If Indonesia Power wants to reduce the price or cut down the supply order, that?ll be fine for us as long as it tells us in advance so that we can find alternative buyers,? Sukrisno said.
PTBA sells 25 percent of its products to export markets. (Godang)