Indonesias state power giant to sign long-term contract to secure coal supply for power plants

PT PLN is preparing an early warning system to monitor the security of coal supply,digitalisation of supply chain, an integrated system that provides real-time information on coal distribution, the amount of supply needed as applied by state coal miner PTBA, and robust cooperation involving the Directorate General of Mineral and Coal at the Ministry of Energy and Mineral Resources (ESDM).

In addition to that, the company will focus on purchasing coal directly from a mining owner with a long-term contract aimed at guaranteeing that the supply is adequate.

It is vital for PT PLN to cooperate directly with coal mining owners for the sake of coal supply for our power plants in the long-term, said the companys Executive Vice President Corporate Communication and CSR Mr Agung Murdifi as cited in thereleaseon Monday (23 Aug).

Mr Agung also thanked the Government for its suggested steps in ensuring the sustainability of coal supply in the power system.

He elaborated PT PLN benefits from direct purchase from coal miners, in terms of the volume of supply and production.

Furthermore, the Government suggests that the power giant signs a long-term contract with a benchmark price evaluated every year.

Previously, PT PLN, state-owned coal miner PTBA Bukit Asam, and state railway company PT KAI signed a Memorandum of Understanding (MoU) to secure coal supply for the electricity needs.

Today, we are shifting to the next level. Philosophically, we share one common view, but of course, we need to optimize in the operational context,saidPLN Deputy Director Darmawan Prasojo during the signing of the MoU on 19 August.

Meanwhile, PT PLN is considering to retire coal-fired power plants (PLTU) in 2025 and will replace them with renewable energy-powered plants, aimed at curbing emissions.

We will be carbon neutral in 2060 as highlighted in the PLN Roadmap, PT PLN Commercial and Customer Management Director Bob Syahril 31 May.

According to the Paris Agreement signed in 2015, Indonesia is committed to slashing emissions 29 per cent below business as usual and 41 per cent with international cooperation by 2030.

Economist at INDEF, Rusli Abdullah, told TOC on 28 July that the decision to replace coal-powered steam power plants must be taken with careful considerations and preparation.

If PT PLN is planning to stop the operation of its coal-fired power plants, I think geothermal power plants can be the best solution due to our huge amount of geothermal sources (23.9 GW the official data showed in March 2020). Yet, the plan needs thorough considerations and preparations as coal is still the main source of electricity, said Mr Rusli.

The energy ministry has officially increased the 2021 coal output target from the initial target of 550 million tonnes to 625 million tonnes, indicating that coal is likely to be Indonesias energy mainstay in the long run amid continued efforts to curb emissions and develop renewable energy-based power plants.