PLN needs two million tons of coal for Suralaya this year

Power firm PT Indonesia Power, which manages and operates all the power plants owned by state electricity company PT PLN, said it needed two million tons of coal this year to cover the shortfall in coal supplies from state owned coal mining company PT Bukit Asam for its giant power plant in Suralaya, West Java.

Indonesia Power's corporate secretary Lilie Tjarlie said the Suralaya power plant consumed 10 million tons of coal per year but thus far Indonesia could only secure eight million tons of coal supplies for its power plant this year.

The eight million tons of coal supplies will come from Bukit Asam and private coal producers PT Kitadin and PT Arutmin she said.

Bukit Asam, which is based in South Sumatra, was initially committed to supplying eight million tons of coal to Suralaya, but it later reduced its supply commitment to 6.1 million tons due to transportation problems.

Last year, Indonesia Power signed three-year contracts with Kitadin and Arutmin allowing the former to buy a total of four million tons of coal per year starting in 2001. But, both companies later lowered the amount of coal supplies to two million tons per year due to the depreciation of the rupiah against the dollar.

"Under the coal sale and purchase agreements with Kitadin and Arutmin, the prices for their coal supplies were made on the assumption of the rupiah's rate of Rp 7,800 against the U.S. dollar. When the dollar rose to around Rp 11,000 recently, both companies told Indonesia Power they would only supply two million tons of coal per year," Lilie told Petromindo.Com.

"Thus, we still need another two million tons of coal for the Suralaya power plant this year," she said.

The Suralaya power plant, billed the largest power plant in South East Asia, has seven operating units with a combined power generation capacity of 3,400 Megawatt (MW). Four of the power units have each the capacity of 400 MW with each of the remaining three units able to produce up to 600 MW.

The ministry of finance is trying to solve Indonesia Power's problem by pressuring the country's coal contractors to sell their coal to the company.

Director general of oil and non-tax revenue at the ministry Sahala Lumban Gaol held a meeting on Wednesday with ten coal mining companies. The companies are PT Adaro Indonesia, PT Berau Coal, PT Kaltiim Prima Coal, PT Kideco Jaya Agung, PT Jorong Barotama Greston, PT Turbindo Coal Mining, PT Bukit Baiduri Enterprise, PT Bukit Sanur, PT Kitadin, PT Karbindo Abesyapardi.

According to sources, Sahala initially planned to ask the companies to sell the government's share in their coal output to Indonesia Power. But, due to the protests from the ministry of energy and mineral resources, he backed down from the plan. Instead, he asked the companies to sell some of their outputs to Indonesia Power.

Under contracts, the government is entitled to receive 13.5 percent of the coal contractors' output in royalties and tax. Currently, the contractors sell the government's coal share and deliver the proceeds to the government.

The result of the Wednesday meeting remains unclear, but prior to the meeting, sources in the coal contractors summoned to the meeting said the companies were likely to turn down the government's request.

They said the price quoted by Indonesia Power for the coal supplies was too low. Besides, they doubt Indonesia Power's ability to make payment on time.

Indonesia power set the price for the coal at Rp 150,000 or around $15 per ton as against the international price of between $27 and $28 per ton.

The sources recalled that Indonesia once held an auction to supply coal for the company, but no producers came to the auction.

Lilie said if local coal producers refuse to sell coal to Indonesia Power, the company will use oil rather than coal to fire the Suralaya power plant. She noted however the only two of the seven units at the Suralaya power plant are able to switch from coal to oil.

As such, Indonesia Power is likely to import coal from Australia. (Arri Darmawan)