To support the Indonesian coal production and to provide shield to the China’s proposed ban on low grade coal import, Indonesian state energy production company Perusahaan Listrik Negara (PLN) is planning to increase its coal based power generation capacity by 40,000 MW over the next seven year.
Indonesian energy and mineral resources minister, Jero Wacik announced on Monday a new plan that will add an additional 5,000 MW of coal-fired power capacity to projects being undertaken by Perusahaan Listrik Negara (PLN) by 2020. The proposal adds to an existing 35,000 MW of coal-fired power projects in the pipeline.
The capacity addition is primarily intended to utilize Indonesia's low-rank coal and would absorb around 20 million ton a year. The plan would raise Indonesia's domestic coal consumption to about 100 million ton by 2018, up more than 50 percent from this year's projected coal use.
PLN has a current capacity of 46,000 MW, of which 21,500 is coal-fired. PLN, which accounts for 98 percent of Indonesia's domestic coal consumption, is projected to consume about 64 million ton of coal in 2013.
Output of the mineral in Southeast Asia's biggest economy is expected to hit 391 million ton in 2013 compared with around 384 MnT last year, the government said.
As, in 2011 Indonesia overtook Australia as the world's top exporter of thermal coal as a result of growing demand from China and India, in part because of the geographical advantage that allows it to ship the power-station fuel more cheaply than its competitor further south.
China, the world's top consumer and producer of the mineral, imported 55 MnT of low-grade coal in 2012, mostly from Indonesia. China's proposal to cut low-grade coal imports will hurt an Indonesian industry already suffering from plunging global coal prices.
“This is a new challenge,” Bob Kamandanu, chairman of the Indonesian Coal Mining Association, told the conference, adding that PLN also had to speed up the development of power plants to meet ballooning domestic power demands.
India, another major importer, may also soon impose tighter regulations to improve the quality of coal supplies.
“If one country doesn't want to import, we'll look for another market. If exports decline, we can use it domestically,” the minister said.
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