Coal producers asked to help PLN

Coal producers asked to help PLN

Fitri Wulandari, The Jakarta Post, Jakarta

The government urged on Thursday the country's coal producers
to sell more coal to the Suralaya power plant in West Java, which
is owned by public utility PLN, to prevent possible blackouts in
Java and Bali.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro
admitted that coal producers now preferred to export their output
to take advantage of high coal prices.

"Our office has advised coal producers to pay attention to
national interests so that the coal can be switched to domestic
use for electricity generation," Purnomo said on Thursday.

The Java-Bali power grid has been on alert since Tuesday as
Suralaya, the country's biggest power plant with a combined
capacity of 3,400 Megawatts (MW) could not run at full capacity
due to low coal supplies. At present, Suralaya only supplies
2,200 MW.

Coal supplies to Suralaya have been running thin as its major
supplier, state coal miner PT Tambang Batubara Bukit Asam (BA),
ran into transportation problems.

Coal delivery from BA's mine in Tanjung Enim, South Sumatra to
Tarahan port in Lampung by train has been disrupted since
December 2003 due to problems affecting the railway.

PT BA officials could not be reached for comment.

The Indonesian Coal Producers Association's (APBI) data says
BA supplies 6 million tons of coal a year out of the 11 million
tons needed for Suralaya.

Suralaya's operator PT Indonesia Power, a PLN subsidiary, gets
another 4 million tons from several companies, including Kideco
(2 million), Berau Coal (1 million) and Adaro (1 million). PT
Indonesia Power buys the remaining one million from the domestic
spot market.

Purnomo advised PLN to secure long-term coal contracts with
power plants rather than buying from the domestic spot market.

The APBI's chairman Jeffrey Mulyono explained major coal
producers normally operated with long-term contracts.

Potential supplies may come from small producers who do not
have long-term contracts and sell their output on the spot
market. However, producers of this type, who are very sensitive
to price, now prefer to export their coal rather than selling it
on the domestic market.

"It is normal that they would prefer to export, given the
current good prices of coal," Jeffrey told The Jakarta Post on
Thursday.

Coal prices have strengthened since early this year, mainly
due to soaring demand from China. The price reached US$50 per ton
in March this year, compared to $25 per ton two years ago; and
has now eased to $35 per ton.

Indonesia produced 109 million tons of coal last year, 70
percent of that was sold on the export market.

As of Thursday, the Java-Bali power grid could only supply
13,710 MW, while peak demand reached 13,600 MW. This left the
grid with thin power reserves of 110 MW.

With an installed capacity of 17,700, the Java-Bali power grid
needs reserves equal to the capacity of one big power generation
unit, or 600 MW, to avoid blackouts.

PLN had warned of rotating blackouts should there be a major
disruption to any big power plant in the Java-Bali power grid.

Java-Bali weekly power balance

Day Installed capacity Supply Peak Load Reserves

(MW) (MW) (MW) (MW)
May 10 17,700 13,900 13,600 300
May 11 17,700 13,660 13,600 60
May 12 17,700 13,718 13,600 118
May 13 17,700 13,710 13,600 110