PLN secure 20-year coal supply

State owned electricity company PT Perusahaan Listrik Negara (PIN) has arranged coal supplies of 69.2 million metric ton a year under 20-year contracts, Helmi Najamuddin, the company?s head of coal division said as quoted by The Jakarta Post.

The contracts include purchase by independent power producers, he said.

Coal demand for electricity generation from PLN and private power stations may rise to 67.8 million tons in 2014 from 54 million in 2012, according to data from the company. Consumption may exceed contracted supplies of 88.7 million tons in 2015 as Indonesia plans to burn more coal to compensate for declining oil output and cut its oil subsidy.

?We will start seeking additional supply starting in 2014 for 2015 onwards as new power plants begin operation,? Najamuddin said.

Power plants have options to buy more or less than the 20 percent contracted to adjust for consumption, he said. Prices are negotiated annually and must be calculated using the government?s monthly price benchmark, Najamuddin said.

PLN also plans to stop buying coal through tenders and may opt for ?direct selection? of suppliers for future contracts, Najamuddin said.

More than 20 companies including mining units of PT Adaro Energy and PT Bukit Asam currently supply the fuel to PIN and independent producers.(*)