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tate-owned power company PT PLN has awarded contracts for the construction of three coal-fired power plants to have a combined capacity of 2,140 megawatts (MW) in the South Sumatra 5, 6 and 8 mining areas.

PLN planning and risk management director Murtaqi Syamsuddin revealed on Friday that PT DSSP Power Sumsel, a subsidiary of publicly listed firm PT Dian Swastika Sentosa, won the bidding for the South Sumatra 5 plant, which would produce 300 MW of electricity.

The 600 MW South Sumatra 6 plant was awarded to a joint venture by Korea-based Posco and DH Energy, while another joint venture between state coal producer PT Bukit Asam and China Huadian won the bid to build the 1,240 MW South Sumatra 8 plant.

“For South Sumatra 5, we have signed the power purchase agreement [PPA]. We expect to sign PPAs for South Sumatra 6 and 8 in the first half of this year,” Murtaqi said at the launch of the company’s 2011-2020 electricity procurement business plans (RUPTL).

He would not reveal the price of the electricity to be bought from DSSP.

For the South Sumatra 6 and 8 plants, PLN and the contract winners have signed letters of intent so contractors could directly seek financing for the projects before beginning construction.

The three coal-fired plants are expected to begin commercial operations in 2015.

As previously reported, PLN has started the tender process for three other mine-mouth power plants: the 1,200 MW South Sumatra 9, the 600 MW South Sumatra 10 and the 800 MW Jambi.

The company has calculated that Rp 1 trillion (US$110.44 million) per 100 MW was required to build a coal-fired power plant.

The latest RUPTL states that the firm will build mine-mouth power plants in Sumatra with a total capacity of 7,310 MW, with 6,510 MW of that coming from PLN-built plants and 800 MW from those constructed by independent power producers.

The construction of mine-mouth power plants is part of the company’s strategy to utilize coal reserves that cannot be traded elsewhere due to a lack of transportation facilities.

PLN suggests that the price of coal for mine-mouth power plants should not be determined by the market price, but by the production cost plus margin. The price should remain the same until the PPAs expire.

Company estimates show that the consumption of coal for electricity generation will grow significantly until 2020. This year, consumption is predicted to hit 59.3 million tons, up from 41.8 million tons last year. The number is expected to jump to 73.8 million tons in 2013, 83 million tons in 2014 and 88.8 million tons in 2015.

Entering 2016, consumption could reach 96 million tons and then 101.4 million tons in 2017. In 2020, consumption is expected to be 125.7 million tons.

PLN president director Nur Pamudji said that PLN would not import coal for its power plants. Supplies would come from domestic sources via the domestic market obligation (DMO) regulation.

“We won’t look for coal supply from abroad [as] all will be taken from domestic producers. That will be sufficient, considering our national coal production has exceeded 300 million tons per year,” he said.

This year, PLN aims to sell 170,295 gigawatt hours of electricity to 48.16 million customers. From those sales, the company expects to earn Rp 132.62 trillion, increasing from Rp 114.06 trillion last year. That calculation assumes that the government increases basic electricity tariff by an average of 10 percent, starting on April 1.