MEMR: No CV limit for coal in S. Sumatra 9, 10 power plant projects

The Ministry of Energy and Mineral Resources (MEMR) has finally asked state-owned electricity firm PLN to cancel a recent company policy, which will require the winning bidders of the South Sumatra 9 and South Sumatra 10 coal-fired power plant projects to use low rank coal with calorific value (CV) of 3,000 kcal/kg.

Minister of Energy and Mineral Resources Jero Wacik said in an August 21 letter to PLN President Director Nur Pamudji that the CV of coal to be used in the projects must not be limited to 3,000 kcal per kg, and that PLN must observe the most efficient procurement process in developing the projects.

Several coal miners have previously protested PLN?s plan to require the winning bidders of the 2x600 MW S. Sumatra 9 and 1x600 MW S. Sumatra 10 mine-mouth power plant projects to use the 3,000 kcal/kg coal, arguing that such limitation would only favor certain miners and that forcing coal miners to utilize the low rank coal with such low CV would inflate production cost of the electricity.

PLN, however, has argued that although the use of coal with CV of 3,000 kcal/kg would increase cost, it would provide greater benefit for the government including in terms of extra royalty from the optimization of the huge low rank coal reserves in South Sumatra. (*)