Interview: Catalyst for Central Kalimantan and beyond

By Tri Subhki R

Central Kalimantan Province is expected to have additional electricity capacity in the near future produced by PT SKS Listrik Kalimantan (SLK), an indirect subsidiary of IDX-listed coal and power firm PT Dian Swastatika Sentosa Tbk (DSSA).

SLK is developing the 2x100 MW Kalselteng-1 coal-fired power plant in Gunung Mas Regency, Central Kalimantan Province.

The US$340 million worth project is expected to start commercial operation at the end of 2019. It is one of three Independent Power Producer (IPP) projects under DSSA. The other two IPP projects are 2x150 MW coal-fired power plant Sumsel-5 in Musi Banyuasin, South Sumatra Province and 2x50 MW Kendari-3 in South Konawe, Southeast Sulawesi Province.

Coal supply for the Kalselteng-1 power plant will be provided by PT Surya Kalimantan Sejati (SKS), also an indirect subsidiary of DSSA, which holds an IUP mining business license for a coal concession in Gunung Mas Regency

Petromindo.com recently talked with Jack Djaksahari Bujung, Commissioner of SKS, about the development progress of Kalselteng-1 project and SKS as the dedicated coal supplier.  The excerpts are as follow:

Petromindo: Please explain about the progress of Kalselteng-1 project?

Jack: The project is actually part of (state-owned electricity firm) PT PLN’s plan to cover the electricity distribution in Central Kalimantan and South Kalimantan (provinces), so it is named Kalselteng-1.

This is the third project. Our first project is 2x150 MW Sumsel-5, which is commercially operating, and the second is 2x50 MW Kendari-3.

P: What about the SKS coal project development?

J: The SKS coal mine is dedicated to supply the Kalselteng-1 (power plant). We actually have completed the coal hauling road construction. It is expected to start commercial operation at the end of 2019 after the power plant and PLN are ready, which is estimated to complete in September.

We are ready to sign contract with the mine contractor, PT Putra Perkasa Abadi (PPA), and PPA may start the mobilization, which may take one or two months.

SKS, in fact, is only one of (our) four IUPs. The other three IUPs are prepared for expansion.

P: How do you see the business prospect of IPP?

J: Electricity is actually a catalyst infrastructure which is required for economic development. It is different with coal mining business for seaborne markets. IPP business is relatively secured because it offers 25 years contract with PLN.

It means mutual benefits for SLK, SKS and PLN. In one hand, we secure cash flow and revenue for 25 years and PLN gets a secured coal supply because our mine is dedicated for the power plant.

We see that Kalimantan is prospective, regardless of the government’s plan to develop (the country’s) new Capital City in Palangkaraya or Balikpapan-Banjarmasin. Not only providing financial benefit for the company, IPP is also expected to be a catalyst for development in Kalimantan.

Electricity as a catalyst may create multiplier effect since it can attract investors to invest in the region. Investors always ask for supporting infrastructure, particularly road and electricity, before deciding to invest.

P: How much is the total coal reserves and resources of SKS?

J: For Kalselteng-1, we have 45 million tons of coal reserves based on JORC Report for 25 years of operation. The coal resources can be converted to reserves up to 70 million tons. The power plant will require 1.2 million tons of coal per year at 100 percent availability factor.

If we want to be more conservative, the availability factor may be less than 100 percent and coal consumption may be at 1 million tons (per year). It depends on whether we will be more conservative or optimistic.

Our coal is low-calorific value coal at 3,200 kcal/kg (GAR) and the power plant is designed for this type of coal. We are confident that we can secure coal supply (contra) for 25 years to the power plant.

P: In macro perspectives, how is actually the electricity demand in Kalimantan?

J: For short term, Kalselteng-1 is designed for (power supply in) South Kalimantan and Central Kalimantan (provinces). But, PLN plans to develop power grid circling all Kalimantan regions. For longer term, there will be power grid connecting all regions in Kalimantan.

This is the potential we are looking at right now. Regardless, we already secure 25 years of contract with PLN under take-or-pay agreement of Power Purchase Agreement (PPA).

For all regions in Kalimantan, we know that electricity is borderless. Maybe someday we can supply electricity to Malaysia and Brunei Darussalam. But, we are not talking about inter-island electricity distribution by using undersea cable, which is not economical.

P: How do you address environmental issue related to coal-fired power plant?

J: We always comply with all environmental regulations. The coal-fired power plant emits fly-ash and bottom-ash. For fly-ash, we control it with limestone injection. We already have limestone mine near to the power plant.

For bottom-ash, we are trying to develop in-pit bottom ash to reduce acid content in the overburden in order to achieve water quality standard. So, our environmental commitment is beyond compliance. Because we consider more than post-mining, but more about sustainable and long term prospect both for local communities and our company.

Editing by Reiner Simanjuntak