PLN opposes PTBA’s plan to raise coal price

State owned electricity company PT PLN has opposed a plan by state owned coal producer PT Bukit Asam (PTBA) to increase coal prices from the current level, Investor Indonesia daily reported on Saturday.

“The planned increase in coal price will automatically result in an increase in production cost which will in turn affect electricity tariffs,” PLN’s president Eddie Widiono said in Jakarta on Friday.

At present about 30 percent of PLN’s power plants use coal, while PLN’s spending for coal reaches about Rp4 trillion a year. The company’s 3,400 MW Suralaya power plant in Banten, for example, has a contract to buy 6.1 million tons of coal from PTBA a year. The contract will last until 2012.

PTBA has said that it plans to increase the price of its coal sold in the domestic market beginning 2004 to follow the increase in the coal price in the international market. China, the world’s largest coal exporter has raised its coal prices to meet surging production cost.

The management of PTBA said that it would review all the coal contracts with its local buyers including PLN to make an adjustment to the increase in the coal prices in the international market. (*)