COAL PRICE DECLINE CONTRIBUTES TO INDONESIA'S CAD

by Andi Abdussalam

Jakarta, Nov 10 (Antara) - The decline in the prices of coal in the world market is also believed to contribute to the widening of the country's current account deficit (CAD) in the third quarter of 2018.         The price of coal has been declining over the past three months this year and is currently set at US$94.90 per ton. It declined from $100.89 and $104.81 per ton in October and September, respectively, and $107.83 per ton in August.          According to Minister of Trade Enggartiasto Lukita, coal was one of the commodities that affected the decline in export performance in August 2018 against July 2018.          "Exports are declining compared to last month, which is caused as we stopped coal trade. We have asked traders to stop coal exports. Now, we allow them to export it again," Lukita stated, after attending the Synchronization of Consumer Protection Policy event in Jakarta, on Monday (Sept 9).           The Minister of Trade explained that the trade balance deficit of $8.8 billion in August 2018 was also influenced by the sale of coal, which was prioritized for domestic market only, and was carried out based on the policy of domestic market obligation.

GOVERNMENT TO OPTIMIZE USE OF COAL IN ENERGY MIX

by Andi Abdussalam

Jakarta, Nov 9 (Antara) - Indonesia has large coal reserves of some nine billion tons, or some 1.2 percent of the world's total deposits, yet they should be exploited commercially in an environment-friendly manner to avoid its negative impact.          Most importantly, coal is still a potential mining resource needed to develop energy, generate electricity, and produce energy mix. Hence, the Ministry of Energy and Mineral Resources (ESDM) is optimizing the use of coal in the national energy mix.          A change in the use of energy sources is estimated in 2025, with coal utilization at 33 percent; natural gas, 30 percent; petroleum, 21 percent; and other forms of energy, 17 percent. This awareness arises, as oil reserves are depleting and will run out someday.          "We admit coal is a fast step in providing primary energy. The government does not remain silent about what is there," Deputy Minister of ESDM Arcandra Tahar noted in a written statement received by Antara in Jakarta on Sunday (Nov 4).          He added that currently, the government continues to make various strategic efforts to ensure an optimal energy mix in power generation. This is in line with the government's mission to create a clean environment and achieve the national economic growth targets.

COAL BUSINESS REMAINS PROSPECTIVE

by Andi Abdussalam

Jakarta, Nov 8 (Antara) - Coal business happened to be sluggish in the 2012-2015 period because coal prices in the world market fell sharply, but it has begun to crawl up since early 2017.         Though prices of coal fluctuate, yet businesses still see good prospect in coal business. PT Indika Energy, for example, is of the view that coal remains prospective and the company's mainstay.          "We have subsidiaries engaged in various fields such as oil and gas, power plants, and coal," PT Indika Energy's Managing Director & CEO Azis Armand told reporters in Jakarta recently.           One of the company's subsidiaries managing coal is Kideco, located in Paser, East Kalimantan. The concession area is 50,921 hectares. It remains optimistic with the coal business.           To date, domestic market Obligation (DMO) has reached 25 percent of total production, with an average production of 2.5 to 2.6 million tons per month with a production target of 34 million tons at the end of the year.

ECONOMIST WELCOMES GOVERNMENT'S BENCHMARK PRICE OF COAL

by Andi Abdussalam

Jakarta, March 13 (Antara) - In an effort to protect state-owned electricity company PLN from being affected by the increase in coal price, the government has set a benchmark price of the commodity for PLN's domestic coal-fired power generators.          The price of coal continues to increase over the past several months as demand from Asian countries, such as China, India, and Vietnam, is on the rise. The price is now about US$100 per ton.          Based on the Energy and Mineral Resources (ESDM) Ministerial Decree No. 1320 K/32/MEM/2018, the benchmark price of coal (HBA) for March 2018 is set at $101.86 per ton. However, for PLN, especially for its power plants which are expected to provide electricity for the community, the price of coal (HBA for PLN) is set at about $70 per ton.          This is to help PLN maintain its electricity tariffs in order to protect the purchasing power of people and competitive industries.          Energy economics observer from the University of Gajah Mada (UGM), Fahmy Radhi, considers the government's decision to set the selling price of coal for domestic power plants at $70 per ton as quite realistic.

WHY DON'T WE USE COAL TO PRODUCE CHEAP ELECTRICITY?

By Andi Abdussalam

Jakarta, Oct 5 (ANTARA)  - Indonesia has large coal deposits that can be used  as a cheap alternative energy to replace expensive fuel  oils so that the government no longer needs to spend huge amounts of funds to subsidize state-owned electricity firm (PLN)  which so far still uses costly oil to produce electricity for the people.          However, most of Indonesia's coal production so far is for exports and only about 25 percent is for domestic consumption. "Some of the coal production is exported so that supply for the need at home became small," Nurdin Tampubolon,  deputy chairman of the House of Representatives (DPR)'s Commission VI for energy affairs, said recently.          Next year, for example, only about 24.17 percent of the coal production in the country will be used for domestic consumption.  Based on data from the Ministry of Energy and Mineral Resources (ESDM), Indonesia's coal production in 2011 is set at 326.65 million tons. But only 24.17 percent or 78.97 million tons are earmarked for domestic consumption.          Nurdin Tampubolon said that Indonesia actually had enough energy sources to meet the need of its electricity and industry at home. Indonesia is the biggest coal producer in the world with a huge amount of coal deposit which could be exploited for about 100 years.          According to the ministry of energy, Indonesia has at least 19 billion tons of coal deposits that may replace oil and gas as a source of energy in the future.          Only a small part of the coal deposits has so far been used while the country's coal production has reached over 250 million tons  per year.          The Ministry of Energy and Mineral Resources has predicted that Indonesia's coal production in 2011 would reach 326.65 million tons, up 24.45 percent from that a year earlier which stood at 262.48 million tons.          Based on ESDM Minister Darwin Saleh's decree August 31, 2010,  the coal production for next year is expected to came from 53 coal mining companies in the country. Of the 53 firms, 42 coal exploitation contract companies, one state-owned firm and 10 authorized coal mining enterprises.          The ministry also predicted that coal need for domestic consumption was about 78.97 million tons in 2011. The minimum need for coal at home was set at 24.17 percent of the targeted 362.65 million tons.          Of the total domestic consumption, the ministry predicted that generators' need  for coal in 2011 is about 66.28  million tons  while the need of the state-owned electricity firm PLN was set at 55.82 million tons.          Primary Energy Director of PLN Nur Pamudji said that the need for coal of PLN based on the energy ministry was in accordance with the state-owned power firm's request.          He said that of the allocation of 55.82 million tons, about 23.32 million tons would be used for PLN's 10,000 megawatt power generators and the remaining 32.5 million tons for generators other than the 10,000 MW power program. "This year, the need of PLN for coal reaches 38 million tons," he said.          Other allocation of Next year's coal production would be channeled to private power generators amounting to 8.97 million tons, PT Freeport Indonesia 0.83 million tons, PT Newmont Nusa Tenggara 0.47 million tons and PT Pusaka Jaya Palu Power 0.19 million tons.          In the meantime, metallurgy factories will need 0.43 million tons which consist of 0.14 tons for PT Inco and 0.2 million tons for PT Aneka Tambang.          Allocation for cement, fertilizer, pulp and textile factories will amount to 12.35 tons which consist of 8.86 million tons for cement factories, 0.92 million tons for fertilizer firm, 0.6 million tons for pulp and 1.97 million tons for textile and textile-product factories.          Of the 53 coal mining companies which were expected to produce the 326.65 million tons next year, publicly listed PT Batubara Bukit Asam  (PT BA) is expected to produced 15 million . The company's present capacity is around 12 million tons a year.          PT BA even intends to  become Indonesia's biggest coal producer in 2016 with its production to reach 70 million tons a year. Its president director, Sukrisno, said. He was optimistic the target would be met. It would beat PT Adaro Tbk.'s production which is around 45 million tons a year.          "With the additional coal shipping railway infrastructure and coal collection port we are optimistic we will become the biggest national player," he said at the signing of cooperate to develop the 270 kilometer long coal shipping railway from Tanjung Enim to Tanjung Api-Api recently.           Sukrisno said  his company's coal production this year was expected to reach 12 million tons. To meet coal demands in the national and international market the company had raised its coal output significantly,  Soetrisno said on the sidelines of the opening ceremony of Indonesian Fire and Rescue Challenge (IFRC) recently.     on Monday.          The project worth US$1.6 billion and financed by an Indian investor is expected to be able to increase coal shipping capacity significantly and operate in 2014 with a load capacity of 35 million tons a year.          Sukrisno said PT BA's coal reserves reached 6.5 billion tons. "We will continue exploring them while acquiring mining companies in Kalimantan," he said. ***2*** (T.A014/A/HAJM/13:58/f001 ) 05-10-2010 13:57:3

RI TO STOPS COAL EXPORTS GRADUALLY

By Andi Abdussalam

Jakarta, Feb 3 (ANTARA) - Indonesia, which over the past few years has become the world's third largest coal exporter after Australia and China, is planning to gradually stop its exports in order to help strengthen the country's energy resilience.

         As it is now carrying out its second coal-fired 10,000 MW power crash program, Indonesia, with coal reserves estimated at 4,328 million tons, will need to save its coal as an energy source to meet future needs.

         A recommendation to that effect is now being formulated by the National Energy Board (DEN), and will later be submitted to the government. According to DEN member Rinaldi Dalimi, during a meeting with Commission VII of the House of Representatives recently, Indonesia should save its coal as an energy reserve to meet future needs.

         "Up till now, DEN members are still discussing a strategy to keep coal to ourselves and the benefits to be derived by such a policy. The finalized recommendation is expected to be presented to the government in February 2010," he said.

         Rinaldi argued that keeping coal as a future energy source would give maximum benefit to Indonesia since the product's price was expected to rise in the years ahead. In addition, the present coal production of 250 million tons per year would only reach its break-even point in the next 20 to 30 years.

         "The coal price 30 years from now will surely be much higher, " he said adding that stopping coal exports would also better ensure the fulfillment of future domestic needs.

         DEN is an institution tasked to draw up formulas for national energy policies. It is chaired by President Susilo Bambang Yudhoyono with the vice president as vice chairman, and the energy and natural resources minister as executive chairman.

         Indonesia has of late been experiencing power shortages that forced state electricity company PLN to impose rotating blackouts in the country's major cities.  The power crisis is expected to be overcome after the completion of the second phase of the government's 10,000-MW power generation program.

         Lagislator Sutan Bhatoegana some time ago said the government had guaranteed that coal producers at home would increase their production from 230 million tons per annum to 280 million tons in order to help meet the domestic need for coal.

         According to the Association of Indonesian Coal Mining Companies (APBI), Indonesia's coal production target for 2010 has been set at 275 million to 280 million metric tons.

         APBI's chief public relations officer, Herman Heru Suprob,  said on Wednesday the 2010 target was higher than last year's which reached 254 million metric tons of which 85 percent was contributed by APBI members.

         "If all goes well, we believe production in 2010 will reach 275 million to 280 million metric tons," he said.

         Herman admitted the industry had had to deal with various problems in 2009 so that it was unable to reach its production  target and even produced 20 percent less than the year before.  One of the problems, he said, was licensing, particularly for mining in  forested areas, a process that could take between six and 12 months to complete.

         He said this had happened because of lack of coordination between the central administration, in this case the energy and mineral resources ministry and regional administrations as well as between provincial and district administrations. "The industry would suffer if they would go by themselves and become egocentric," he said.

         According to a 2008 statistical energy survey, as quoted by  the MBendi Information Services portal, Indonesia has coal reserves of 4,328 million ton. Indonesia is one of the leading exporters of sub-bituminous coal which represents the bulk of Indonesian coal production.

         Based on the survey, Indonesia has coal production of 174.83 million tons in 2007, and consumption of 27.8 million tons oil equivalent. Most of Indonesia's coal reserves are situated in the southern parts of Sumatra with the balance located in Kalimantan, West Java, and Sulawesi.

         State-owned PT Tambang Bukit Asam (PTBA) is one of the five largest coal producers in Indonesia. In the past several years, almost a quarter (22 percent) of its production was exported to international markets, including Japan, Taiwan, Malaysia, Pakistan, Spain, France and Germany. The company has mineable reserves of approximately 7.3 billion tons or 17 percent of the total coal reserves in Indonesia.

         For this year, PTBA has set itself the target of producing 14 million tons of coal and a sales turnover of Rp8.9 trillion.  Of the sales turnover, Rp6 trillion was expected to come from exports and the rest from domestic coal sales.

         At the same time, the volume of PTBA coal sales is projected  at 12.224 million tons of which 4.46 million tons would be exported and 7.764 million tons sold at home.

         The state-owned coal mining firm has also set aside Rp1.5 trillion to acquire other coal mining ventures in 2010. According to its President Director Sukrisno, PTBA is exploring the possibility of acquiring coal mining companies in Kalimantan while developing its existing coal mining operations.

         Ar present PTBA was making a bid to acquire a "greenfield" mining concession (KP) in Kalimantan. "We are also interested in taking over mining ventures overseas such as in Australia and Africa," he added.

         PTBA has been intensively looking for coal mining ventures at home it could acquire but would not yet do the same abroad in 2010.  "Acquisitions overseas are included in our medium- and long-term plans," he said.

    
(T.A014/A/HAJM/B003)
2. 20:20.

COAL SUPPLY FOR 10,000-MW POWER PROJECT GUARANTEED

By Andi Abdussalam

Jakarta, March 9, (ANTARA) - While the government is developing its 10,000-MW power production capacity project to meet the country's need for electricity, there is concern about the availability of enough coal to meet the power plants' fuel needs.

        But state-owned power utility company PLN guarantees that coal will be in sufficient supply. PLN had concluded various contracts with coal producers in addition to the government regulation imposing a domestic market obligation (DMO) on coal contractor companies.

        Energy observer Pri Agug Rakmanto expressed fear that PLN would not be able to meet the fuel needs of the 10,000-MW project in the future. Some time in the past, PLN had to carry out alternating power cuts due to a shortage of coal supply.

        "With the need for only 30 million tons at present, PLN is already overwhelmed to obtain such amount of supply, not to mention if its 10,000 MW project is already in operation which needs some 65 to 75 million tons of coal per annum," Rahmanto said last week.

        For this purpose, PLN had to conclude long-term contracts with enough numbers of coal producers in order to guarantee coal supplies.

        "Shortage of coal supply to power generators should not happen again as it did sometime in the past," he said.

        According to Nasri Sebayang, the head of PLN's primary energy affairs, the need for coal supply of PLN's 10,000 MW project would be met. The 10,000 MW project will need some 31.9 million tons of coal annually.

        Sebayang said PLN has signed contracts with coal producers for the procurement of 16.2 million tons of coals per annum to be supplied to the 10,000 MW plants.

        In addition, a tender has been also called for the procurement of another 12.2 million tons, whose contacts are now in the process to be signed. The remaining need of 3.4 million tons per annum will be put out to tender in the third week of March 2009.

        The latest tender will be called for to meet the need for coal of power plants in Aceh, North Sumatra, West Sumatra, Bangka Belitung, Riau, Riau Islands, Lampung and South Kalimantan.

        Director for mineral and coal affairs of the Ministry of Energy and Mineral Resources, Bambang Gatot Ariyono, said the government had reached agreements with coal producer companies where the latter were obliged to supply 68.3 million tons of coal to the domestic need in 2009.

        Of the 68.3 million tons, some 41 million tons are designed for power generators, of which 33 million tons are to be supplied to PLN's power plants.

        With regard to the 10,000 MW projects, Sebayang said that PLN signed contracts not only with one producer but also with several firms for each of its power plants so that supply would be guaranteed.

        The same idea was also expressed by Yogo Pratomo of PLN's team coordinator for the acceleration of the development of the 10,000 MW power project.

        He said that PLN has signed long-term contracts with domestic producers. "Supply is guaranteed because the contractors are reliable," he said.

        Optimism on enough coal supply was also voiced by Sutan Bhatoegana, a member of the House of Representatives (DPR)'s Commission VII which deals with energy affairs.

        Bhatoegana said that the government had guaranteed that coal producers at home would increase their production from 230 million tons per annum to 280 million tons.

        "A production of that volume is sufficient for domestic consumption and exports," he said.

        After all, the government is planning to impose a government regulation (PP) on domestic market obligation (DMO). At present, the government is drawing up the PP on the DMO requirement.

        "With that production volume, coal supply at home would be enough even if no DMO is imposed," Bhatoegana said.

        Gatot Ariyono said next year when the PP is already put into effect, the government would take sanctions against producers which violated it. The sanctions include cuts in production quota.

        The DMO provision is to be included in a government regulation as an implementation of Law No.4 / 2009 on Mineral and Coal Mining. Actually, the government is preparing four PPs on mining, mineral and coal exploitation, guidance and supervision of mining, and reclamation and post-mining activities.

        The DMO provision will be included in the PP on mineral and coal business activities. It is expected that the PPs would be accomplished in the mid of this year.

        Pending, the completion of the PP, the directorate general for mineral, coal and geothermal obliges coal producers to meet the need for coal of domestic market.

        However, energy observer Pri Agung Rakmanto said the government should accomplish soon the DMO regulation for coal producers, so that it would be able to taken sanctions against companies which did not meet their obligation.

        He said that the commitment of producers was not clear enough if the DMO provision was only based on a clause of their present contracts.

        "If need be, the terms of the contracts must be changed, made clear and made more firm. They must mention clear volumes and clear consequences," he said.***2*** (T.A014/A/HAJM/15:45/A/O001) (T.A014/A/A014/A/O001) 09-03-2009 15:40:44