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Jakarta Post

Risks remain for Indonesian coal

  • Bertrand Jabouley and Vishal Kulkarni

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PREMIUM
Singapore   /   Fri, February 9, 2018   /  02:32 pm
Risks remain for Indonesian coal Indonesia’s coal sector — much like the industry throughout the region — has seen a turbulent time in the wake of lower prices. (Shutterstock/File)

Indonesia’s coal sector — much like the industry throughout the region — has seen a turbulent time in the wake of lower prices. However since the middle of 2016, there has been a global rebound in thermal coal prices, leading to strong balance sheets for many coal players within ASEAN, including Indonesia. Within Indonesia, we see potential for growing coal demand. There is a gap in the electrification ratio — a measure of how many households are connected to the power grid — and the government has flagged the addition of about 35 gigawatt of new capacity as a response. Thus the power sector’s consumption of coal could double. This may accumulate with a number of other coal-powered projects in various stages of planning or construction, potentially boosting Indonesian coal exports. All of which would likely exert upward pressure on the coal pr...

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