PLN seeks for geothermal, coal concessions

Petromindo

State-owned electricity firm PT PLN has asked the government for the company to be allocated for up to 14 geothermal working areas (or WKPs), Kontan reported.

The paper quoted PLN President Director Sofyan Basir as saying that the company wants to develop its own source of geothermal energy due to the excessive electricity rates charged by operators of geothermal power plants. ?I?m not against renewables, but what surprised me is the price,? he said.

He suspected there are rent seekers in certain geothermal power plant projects seeking to profit from the booming geothermal sector by charging PLN excessively high power rates. He pointed out that the geothermal power plant operators had offered electricity rate of US$6.5 million per MW, or 13.5 US cents per kWh, compared to only $2 million per MW, or 5 cents per kWh, for coal-fired power plant. Sofyan said that when asked why the power rate is so high, the developer pointed out on the expensive cost of developing infrastructure facilities in remote regions.

Sofyan said that rather than providing the developers with excessive profit, PLN wants to develop its own geothermal concessions.

Meanwhile, Deputy Minister of Energy and Mineral Resources Arcandra Tahar said that the ministry has approved PLN?s request for 14 geothermal WKPs.

Elsewhere, Sofyan said that PLN has also asked the government to provide the company with coal concessions to help ensure coal supply in the future. ?The total capacity of our coal-fired power plants is more than 20,000 MW,? he said.

He feared that domestic coal miners would prioritize export market when coal price rises, thus undermining the PLN coal supply requirement. ?I know that the cost of digging out coal is only $15 per ton, but PLN pays $60 per ton,? Sofyan said.

PLN?s coal consumption currently stands at around 86 million tons per year, and is set to further increase over the next few years once it completes a number of new coal-fired power plant projects. (*)