Indonesia Power sees domestic coal demand rising

Indonesia Power, a subsidiary of state electricity firm PLN Power predicted on Monday that domestic coal use would persistently increase, driven by demand from electricity sector.

?Electricity will grow at the rate of 10 percent annually and 50 percent of that growth will be powered by coal,? said Firdaus Akmal, Indonesia Power?s president director on a seminar organized by Indonesian Coal Society Monday.

?In 2001 domestic coal consumption is 23.5 million tons and electricity sector consumes 16.5 million tons,? he said.

He said domestic coal consumption for 2002 would be 25 million tons, 26.5 million tons in 2003 and 31.3 million tons in 2005. Electricity sector, he said, would continue to consume approximately 80 percent of total domestic consumption.

He also predicted that Indonesian annual coal production would be at 94 million tons in 2002, 102 million tons in 2003 and 116 million tons in 2005.

During the conference, Firdaus called for the government to form a policy to ensure domestic coal supply.

?It is a great irony if domestic supply to vital industry such as electricity sector can not be ensured as Indonesia is one of the world?s largest coal producer,? he said.

Indonesia Power had been scrambling for coal for the past few months for its Suralaya Power plant after state coal producer PT Bukit Asam cut down its supply due to a more attractive export price.

He therefore urged government to set up a benchmark price for domestic consumption at between 5 to 20 percent lower than export price and obligate coal contractors to pay some of the royalty in in-kind.

Currently Coal contractors are obliged to pay 13.5 percent royalty to the government in cash.

?By doing so, we could ensure domestic supply while ensuring fair price is also given to coal contractors.? He said. (alex)