Demand for electric power has increased with the soaring prices of oil in the world market. State electricity company PLN, therefore, plans to launch a crash program accelerating the construction of coal-fired power plants (PLTUs) with a total capacity of 10,000 megawatts. The plan is part of the country's program to reduce the dependence on oil fuel by using more coal, which cheaper in price, as fuel for power plants.
The crash program is to be launched in 2007 to be completed in 2009. PLN already announced plan to build 24 units of PLTU in Java and other islands. In Java, 10 units of PLTU will be built with a total capacity of 7,140 MW. A plant will have a capacity of 300 MW to 660 MW.
Outside Java, PLN plans to build 14 units of PLTU with a total capacity of 1,052 MW, each with a capacity from 7 MW to 100 MW. The projects will be built in Sumatra, Kalimantan and Sulawesi.
Financing Alternatives
A PLN Director, Djuanda Nugraha Ibrahim, said construction of the projects will be offered to contractors through tender with an indicative price of US$ 700 per kilowatt or US$ 5.73 billion for the 24 units of PLTU.
The government gives PLN alternatives to implement the projects. The first alternative is that PLN provides the fund under which the projects will be handed over through an open auction. Another alternative is that the EPC (engineering, procurement and construction) contractors are to provide 85% of the fund needed and PLN to put up the remaining 15%. In this case, PLN will set up special purpose company, seeks stand by loan and provide collateral with the guarantee from the government. However, the government's guarantee may draw opposition from the House of Representatives.
In addition to fund for the construction of the plants, fund will be needed to build transmission and distribution networks. And to build new relay stations.
PLN Transmission and Distribution Director Herman Darnel Ibrahim said PLN will need 200 units of new power relay stations with a total capacity of 20,000 MVA (Mega Volt Ampere) to facilitate power distribution.
Based on indicative price of US$ 750,000-US$ 800,000 for 1 MV, PLN will need US$ 7.5 billion-US$ 8 billion for the networks and relay stations. Apart from funds expected to be provided by investors, PLN plans to issue bonds.
Private electricity projects
The government also encourages Independent Power Producer (IPP) to build their own power plants in areas not reached by power plants already built by PLN. Some of he projects are located in supply crisis areas.
Among the projects to be built outside Java, there are two awarded to contractors without tender. PLN said the projects are awarded without tender as the areas where the units will be built, are facing power supply crisis. The system is allowed by a government regulation No. 3/2005 under which PLN may name the contractor to build the project without tender.
One of the two companies is PT. Cahaya Fajar Kaltim, which will build the Embalut PLTU with a capacity of 2 x 25 MW in East Kalimantan. PT. Bosowa Energi is named to build the Janeponto PLTU in South Sulawesi with a capacity of 2 x 100 MW with an investment of US$ 200 million. Earlier PLN announced that it would build only a PLTU in Bone with a capacity of 2 x 15 megawatt in South Sulawesi. Therefore, the awarding of the project to PT Bosowa Energi has raised an eyebrow especially as it happens the company is owned by Aksa Mahmud, who is a brother in law of Vice President Jusuf Kalla and owner of the Bosowa Group),
The power to be produced by the IPP will be bought by PLN with prices based on a power purchase agreement (PPA).
In 2010, around 71.9 million tons of coal will be needed by power plants
If the crash program could be carried out as scheduled, coal will be the main source of energy to generate electricity in the country. Currently oil fuel is still the main source of energy to generate electricity in the country.
PLN already has large coal fired power plants such as the Suralaya PLTU and the Paiton PLTU, but oil fired power plants are still dominant. In 2004, electric energy generated by oil fired power plants totaled 35,549 GWh as against only 30,806 GWh produced by coal fired power plants.
Coal needed by PLN to fuel power plants in 2004 totaled 15.41 million tons. IPP also have PLTU such as Paiton PLTU and PLTUs owned by Freeport, Newmont Minahasa etc.. Altogether coal needed for PLTUs totaled 22.99 million tons in 2004.
PLN said the 10 units of PLTU to be built in Java under the crash program will need 21.58 million tons of coal a year. And the ones to be built outside Java will need 5 million tons a year. Therefore, altogether, coal needed for PLTUs in Java and other islands in the country will total 71.9 million tons in 2010.
According to a PLN deputy director Tony Agus the 71.9 million tons will include 4.4 million tons for PLTU under partnership program, 2 million tons for PLTU in areas facing power supply crisis, 9.7 million tons for PLTUs to be built by IPP, 26.7 million tons for PLTU to be built by PLN under the crash program and 29.1 million tons for the existing units of PLTU. In addition to the PLN's projects, Government has also offered new private power plant projects to be built by IPP with a total capacity around 10,000 MW. If the projects succeed it will need around 20 million tons coal a year.
See the following table.
PLN said oil fuel requirement will decline from 9.2 million kiloliters this year to 7.49 million kiloliters when construction of the new PLTUs have been completed. If the program is carried out as scheduled, oil fuel consumption for PLN's power plants will be reduced from 30% to 5% of the total fuel consumption in 2010.
15 coal companies take part in PLN's tender for coal procurement
The coal procurement tender to be opened by PLN will be for 21.58 million tons a year to be supplied to 10 units of PLTU to be built in Java as part of the crash program.
Around 26 coal mining companies want to take part in the tender, but only 15 meet the criteria. The winner is to be announced in July this year.
Most or 12 of the bidders are coal mining companies operating in Kalimantan and three in Jambi and South Sumatra. Among the major bidders are PT. Berau Coal and Arutmin Indonesia.
PT Arutmin, which operates in South Kalimantan already take preparations to increase its output of low calorie coal (low rank coal) to 20 million tons in 2010. Low rank coal is the type of sub-bituminous coal with a calorific value of less than 5,000 kcal/kg. Arutmin already supplies 3.6 million tons of coal a year to the Suralaya PLTU in Banten.
PLN will offer the coal supply contract for 20 years. Therefore, the coal mining companies are required...
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