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PLN to build coal fired power plants with a total capacity of 10,000 MW until 2010.

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 to have a coal deposit of at least 150 million tons to guarantee supply during the 20-year contract.

The type of coal to be used by PLN's PLTUs is low rank coal with a calorific value of 4,200 kcal/kg. Investors have shown little interest in low rank coal as it does not sell abroad.

Ambitious projects

The crash program to build PLTUs with a total capacity of 10,000 MW until 2009 may not meet problem in coal supply as there are a number of coal mining companies that will be eager to meet the requirement, but many doubt the projects could be carried as scheduled as it will need large investment with expensive technology. Observers say the program is too ambitious and is not realistic.

Even Energy and Mineral Resources Minister Purnomo Yusgiantoro described the program as too ambitious expressing doubt that it could be implemented in 2.5 years with so many problems that could come in the way of its implementation such as those related to land, transmission, distribution, etc..

Similarly Primary Energy Deputy Tony Agus Mulyanto said the program is not realistic and that coal PLTU needs larger investment than gas fired power plant.

In addition construction of a coal PLTU will take a longer time to completion as it will need boiler. It will take 30 months to build a coal PLTU. The Cilacap PLTU was completed in 26 months--the fastest ever--by Chengda, a contractor from China, but it will be easy to repeat that performance especially when involves many units of PLTU.

PLN and state minister for state enterprises Sugiharto, however, have expressed optimism that the program could be carried out as scheduled.
Table - 1
10 units of PLTU to be built in Java

 Name of projects /
No Location Capacity (MW) Province

1. PLTU Jabar Selatan 2 x 300 West Java
2. PLTU Jatim Selatan,
 Pacitan 2 x 300 East Java
3. PLTU Labuan 1 x 300 Banten
4. PLTU Marunda 1 x 600 West Java
5. PLTU Rembang 2 x 300 Central Java
6. PLTU Suralaya Baru 2 x 660 Banten
7. PLTU Teluk Naga 2 x 300 Banten
8. PLTU Jabar Utara 2 x 300 West Java
9. PLTU Tanjung
 Awar-Awar 1 x 600 East Java
10. PLTU Paiton Baru 2 x 660 East Java

Source : PLN

Table - 2
Power plants to be built outside Java, 2007 - 2009

 Name of
No projects/location Capacity (MW) Province

1. PLTU Meulaboh 2 x 65 NAD
2. PLTU Sibolga Baru 2 x 100 North Sumatra
3. PLTU Sumbar 2 x 100 West Sumatra
 Pesisir Selatan
4. PLTU Amurang Baru 2 x 25 North Sulawesi
5. PLTU Tarahan Baru 2 x 100 Lampung
6. PLTU Mantung 2 x 10 Bangka Belitung
7. PLTU Air Anyer 2 x 10 Bangka Belitung
8. PLTU Timika 2 x 7 Papua
9. PLTU Bengkalis 2 x 7 Riau
10. PLTU Selat Panjang 2 x 5 Riau
11. PLTU Kendari 2 x 10 Southeast Sulawesi
12. PLTU Ende 2 x 7 East Nusa Tenggara
13. PLTU Asam-Asam 2 x 65 South Kalimantan
14. PLTU Bone 2 x 15 South Sulawesi

Source: Energy and Mineral Resources Ministry

Table - 3
Estimate of funds needed by PLN for transmission
power relay stations until 2009

Description Funds needed

Transmission US$ 4.3 billion
Distribution US$ 3.4 billion
Total length of 30,793 km
 transmission
 networks
Total relay stations 1,129 units with
 capacity of 54.128 MVA

Source: PLN

Table - 4
PLTU projects to be built by IPP outside Java

Name of Capacity Location
projects (MW)

PLTU Janeponto 2 x 100 South
 Sulawesi

PLTU Mulut 2 x 100 South Sumatra
Tambang

PLTU Embalut 2 x 25 East
 Kalimantan

PLTU Pontianak 2 x 25 West
 Kalimantan

PLTU Mulut 2 x 25 East
Tambang Kalimantan

PLTU Palu 2 x 25 Central
 Sulawesi

PLTU Lombok 2 x 25 Lombok

PLTU Mulut 2 x 25 South
Tambang Sumatra

PLTU Bangka 2 x 10 Bangka

PLTU Belitung 2 x 10 Belitung

PLTU Tanjung 2 x 10 Riau islands
Pinang

PLTU Tanjung 2 x 7 Riau islands
Balai

PLTU Bima 2 x 7 West
 Nusatenggara

PLTU Gorontalo 2 x 7 Gorontalo

PLTU Ketapang 2 x 7 West
 Kalimantan

PLTU Nunukan 2 x 7 East
 Kalimantan

Name of Operational
projects Developers in

PLTU Janeponto Bosowa Energi, PT 2009

PLTU Mulut Consortium of Bukit 2008/2009
Tambang Asam - PJB Innovative

PLTU Embalut Cahaya Fajar Kaltim, 2007
 PT 2007

PLTU Pontianak Consortium of Maser 2008/2009
 and Medco

PLTU Mulut Consortium of 2008/2009
Tambang Marubeni, Komipo,
 Samlan and Tripatra

PLTU Palu Consortium of 2008/2009
 Indonesia Power and
 Powerindo

PLTU Lombok Consortium of Maser 2008/2009
 and Meta Epsi

PLTU Mulut Consortium of Bukit 2008/2009
Tambang Asam and PJB
 Innovative

PLTU Bangka Consortium of Total 2008/2009
 Orbit - Sutraco and
 YPK

PLTU Belitung Consortium of Orbit 2008/2009
 Prestasi

PLTU Tanjung Consortium of Medco 2008/2009
Pinang - Menamas and Barata

PLTU Tanjung Consortium of Listrik 2008/2009
Balai Nusantara Sukses
 Makmur and
 Shandong

PLTU Bima Consortium of 2008/2009
 Arthiduta-Trakindo-
 Sutraco and YPK

PLTU Gorontalo Consortium of Smart 2008/2009
 Mitra and Walinusa

PLTU Ketapang Consortium of 2008/2009
 Mahakaya

PLTU Nunukan Consortium of 2008/2009
 Indonesia Power and
 Powerindo

Source: Data from various sources

Table - 5
Energy generated by power plants by types
of fuels, (GWh), 2004

 Energy
Types of fuels generated

Oil 35,549
Coal 30,806
Natural gas 17,745
Geothermal 3,146
Total 87,248

Source: PLN

Table - 6
Fuel consumption for power plants, 1995 - 2004

 Oil fuels (million liters)

YEAR HSD IDO MFO Total

1995 1,818 8 1,158 2,983
1996 2,221 16 1,111 3,347
1997 2,982 34 1,590 4,606
1998 2,856 26 1,253 4,136
1999 3,253 21 1,429 4,703
2000 3,142 23 1,859 5,024
2001 3,575 30 1,793 5,399
2002 4,626 41 2,301 6,967
2003 5,024 32 2,558 7,613
2004 6,300 37 2,503 8,506

 Natural
 Coal gas

YEAR (000Ton) (MMSCF)

1995 5,593 220,032
1996 7,967 294,158
1997 9,962 228,268
1998 10,634 222,055
1999 11,414 236,612
2000 13,136 228,838
2001 14,028 222,421
2002 14,054 192,927
2003 15,260 184,304
2004 15,413 176,436

*) Including PLTMG, starting 2004

Source: PLN

Table - 7
Estimate of PLN's coal requirement by 2010.

Uses Total (million tons)

PLTUs of partnership 4.4
 program
PLTUs in crisis areas 2.0
New IPP PLTUs 29.7
PLN's Crash program 26.7
Existing PLTUs 29.1
Total coal requirement 91.9

Source: PLN, Data Consult processed

Table - 8
Coal mining companies taking part in PLN's
coal procurement tender

Name of companies Location

Berau Coal, PT Berau, East Kalimantan

Arutmin Indonesia, PT South Kalimantan

Indexim Coalindo, PT East Kalimantan

Jorong Barutama South Kalimantan
Greston, PT

Tekno Orbit Persada, PT East Kalimantan

Surya Sakti Dharma South Kalimantan
Kencana, PT

Mantimin Coal Mining, PT South Kalimantan

Perkasa Innakakerta, PT East Kalimantan

Consortium of South Kalimantan
PT.Paandgbara Sukses
Makmur and PT.
Bhumi Rantau Energi

Consortium of PT. Kasih South Kalimantan
Industri Indonesia and
PT. Senamas Energindo
Mulya

Triaryani, PT South Sumatra

Baramutiara Prima, PT South Sumatra

Titan Mining, PT Jambi

Source: PLN
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Title Annotation:ENERGY
Publication:Indonesian Commercial Newsletter
Date:Jun 1, 2006
Words:2442
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