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Indonesia Power (IP), a subsidiary of state-owned electricity
utility PLN, said Monday it would need an additional 14 million tons
per year of low-rank coal by 2010 in order to fire its new coal power
plants in Java.
The new plants will have a combined capacity of 3,900 megawatts (MW).
As part of the government's crash program to secure additional power
supply of 10,000 MW from PLN by the end of 2010, PLN has given a
mandate to IP to develop new power plants in Suralaya, Banten (with a
total capacity of 600 MW), Labuan, East Java (600 MW), Teluk Naga, West
Java (900 MW), northern West Java (900 MW) and southern West Java (900
MW).
Indonesia Power's development and commercial director Bambang Isti Eddy
said Monday on the sidelines of a coal-industry seminar in Jakarta that
these power plants had been designed to use low-rank coal with
calorific levels of less than 5,000 per gram burned and a moisture
content of up to 30 percent.
Currently, the company requires 11 million tons of high and low-rank
coal per year to fire its existing power plants at Suralaya -- the
largest coal-fired power plants in Java with a total capacity of 3,400
MW.
The company sources five to six million of high-rank coal per year from
the country's second biggest coal producer, PT Bukit Asam Batubara,
while its low-rank coal requirements are supplied by other local
companies, including Adaro, Kideko and Berau Coal.
Bambang said that he hoped that the local coal industry would be able
to meet rapidly increasing coal requirements, which are expected to
rise by 70 million tons when the new power plants being built under the
fast-track program come onstream.
"By 2010, IP alone will need a total additional supply of 25 million
tons per year, of which only nine to ten million will be high-rank
coal, with the rest being low-rank coal," Bambang said.
Of Indonesia's total of 6.7 billion tons in coal reserves, 70 percent
consist of low-rank coal.
The government has encouraged the construction of coal-fired power
plants that use low-energy coal, which is cheaper than other grades, to
meet growing electricity demand and reduce the use of expensive
oil-based fuels.
Under the government plan, PLN and private power producers are expected
to increase coal-fired capacity by 20,000 MW by 2010.
To encourage increased production of low-rank coal, the government is
considering providing incentives to mining firms producing low-rank
coal with calorific levels of below 4,200 per gram.
The planned incentives will likely take the form of cuts in royalty and
other payments, such as reducing mandatory payments to the coal
development fund to 7.5 percent of total sales from 13.5 percent at
present.
Incentives could also be provided to producers of low-rank coal with
calorific levels of between 4,600 and 5,100 per gram so that the mining
firms would only have to pay 9 percent of their total revenues to the
state.
Indriatmoko, the head of minerals and coal planning at the Energy and
Mineral Resources Ministry, who also attended the seminar, said the
regulations on incentives had been proposed to the Finance Ministry for
approval.
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