PLN faces difficulty setting prices for low rank coal

State electricity firm PT Perusahaan Listrik Negara (PLN) has difficulty in determining the price of low calorie coal for the planned coal-fired power plants with a capacity of 10, 000 megawatts (MW), Kompas reported Tuesday.

PLN?s deputy director of prime energy Agus Nulyantono said in Jakarta Monday that the problem of low rank coal prices had arisen from the absence of standard price for the commodity that had yet to find the market.

?The standard coal price is based on the Barlow Jonker Index and Platts Index. Now we have Indonesian Coal Index. We don?t know yet to which one we will refer because so far there is no market for low rank coal. That?s why, the coal prices are expected to vary from one power plant to another,? Tony said.

Barlow Jonker Index was set up by Australia based on the general coal price in the international market. Meanwhile, Indonesian Coal Index was launched on July 1 of this year.

Currently, the price of high calorie coal (6,000 to 7,000 calories) is around $45 per ton.

PLN is hoping that the producers will offer the price of low rank coal (below 5,000 calories) at between $25 and $30 per ton.

Tony said PLN has chosen low rank coal to be used in power plants because 70 percent of the country? seven billion tons of coal is catagorized into low rank coal.

Due to the difficulty in determining the quality of coal, the government?s plan to tender for companies that will supply coal will not be materialized until September of this year. Under the previous plan, the tender was scheduled to be held in July of this year.

PLN has selected 15 coal firms to supply coal to coal-fired power plants under the government?s crash program.

?We will invite companies that passed the selection phase on June to give their offering in early September of this year,? Tony said.

At least four coal companies will supply coal to each coal-fired power plant to ensure the sufficient coal supply. (*)