PTBA plans Rp 1.8t investment for railway

Rendi A. Witular, The Jakarta Post, Jakarta

State-owned coal mining firm PT Tambang Batubara Bukit Asam (PTBA) plans a huge investment next year to improve the railway facilities used to transport its coal products.

PTBA president Ismet Harmaini said the company, along with power firm PT Indonesia Power and state railway firm PT KAI, had planned to invest some Rp 1.8 trillion (about US$200 million) to enhance railway facilities in South Sumatra and Lampung.

Ismet said improvement in the railway would help PTBA expand its production output and prevent disturbance in distribution chains due to the poor condition of the railway system and associated facilities.

"Transporting coal by train has always constituted an obstacle for the company in increasing production and meeting market demand," Ismet said before a hearing of the House of Representatives Commission IX for energy and mining on Monday.

The investment will cover costs for constructing new railway lines, replacing and repairing old railway lines, and providing new locomotives and coaches.

PTBA has often faced problems in delivering its coal from Tanjung Enim mine in the inland area of South Sumatra to the Tarahan port in Lampung.

PTBA's coal production target for this year has been revised downward to 9.9 million tons from 10.2 million tons, because a collapsed railway bridge has hampered coal delivery from the mine to the port.

Transportation problems have also forced the company to reduce its coal supply to the Suralaya power plant, which in turn has reduced the power plant's capacity to supply electricity into the Java-Bali power grid.

Ismet said the company was currently still discussing with Indonesia Power, the owner of Suralaya plant, and KAI, the railway authority, on the respective investment amount of each of the companies.

"If we are burdened with the greater portion of the investment, we will need to issue bonds or seek loan facilities," said Ismet, adding that the work for improving the railway facilities would start next year.

The publicly listed company is seeking to produce some 10 million tons of coal next year, which is slightly higher than this year's target of 9.9 million tons. The company produced 10.03 million tons of coal in 2003.

The company estimates that sales revenue will increase by 114 percent to Rp 6 trillion this year due to higher coal prices worldwide. Net profit is also expected to jump higher by 139 percent to Rp 341 billion.

PTBA shares ended ... on the Jakarta Stock Exchange on Monday.