TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
PLN to soon settle deals for mine-mouth plants worth $1.73b
State-owned electricity firm PLN aims to immediately settle power purchase agreements (PPAs) for three mine-mouth coal-fired power plants in Sumatra and Kalimantan at a combined investment value of US$1
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
S
tate-owned electricity firm PLN aims to immediately settle power purchase agreements (PPAs) for three mine-mouth coal-fired power plants in Sumatra and Kalimantan at a combined investment value of US$1.73 billion.
The deals have seen a two-month delay because of a prolonged process to acquire coal mining sites in surrounding areas to support future power generation.
PLN expects to ink in September the deals for the power plants, namely the 2x300 megawatt (MW) Jambi I plant in Jambi valued at $1.17 million, the 200 MW Kalselteng 3 plant in South Kalimantan valued at $280 million and the 200 MW Kaltim 5 plant in East Kalimantan valued at $280 million, PLN procurement director Supangkat Iwan Santoso said on Tuesday.
“Initially, we expected to sign the PPAs for the three facilities in July. However, there have been several obstacles in the process,” Iwan said at the House of Representatives.
The firm is finalizing the acquisition process of coal mining sites near the Jambi plant to secure coal supply for the facility. It is also in the final negotiation phase with prospective independent power producers (IPPs) for another two sites.
The signing of the agreements is contingent on PLN acquiring the mining sites using its internal cash.
In its latest electricity procurement business plan, the state firm envisioned that there will be 16 new mine-mouth power plants with a combined capacity of 6,990 MW in the country within the 2017-2026 period. PLN plans to develop half of the figure, leaving the rest to be built by IPPs.
However, as of today, it has only settled the PPAs for four of the eight mine-mouth plants it seeks to build.
Another three, of which negotiations are underway, are vital to accelerate the realization of its goal.
Iwan further said that PLN hoped to hold a 51 percent stake in each of the acquired mining sites for the three power plants.
“So it’s possible that one mine-mouth plant will get its coal supply from three coal mining sites with combined reserves of 100 million tons of coal,” Iwan said.
The country’s only electricity offtaker has estimated that Indonesia may need nearly 1 billion tons of coal to support the operations of 16 mine-mouth plants over a 30-year period.
Meanwhile, PLN alone will require around 1.5 billion tons of coal for its regular coal-fired facilities over the same period.
Hence, it plans to acquire at least one coal mine — aside from the ones it will acquire for the three mine-mouth projects — before the end of this year to preserve long-term supply for its power plants.
PLN earlier targeted as locations for its coal mines Kalimantan and Sumatra, each of which has coal reserves mounting to 15.4 billion tons and 13 billion tons, respectively.
By acquiring those mines, the firm would shift focus to coal production costs, concerning itself less with the volatility of global commodity prices.
Nevertheless, PLN has struggled to find ideal coal mines for acquisition because of insufficient technical data on coal reserves.
Within the first six months of this year, PLN and a number of IPPs commenced the operation of new power plants with a combined capacity of 1,361.6 MW, more than half of the total 2,688 MW in additional capacity they seek to bring before year-end.
