Indonesia’s Listrik Negara to Power Future With Low-Energy Coal

May 29, 2014 9:39 pm ET

May 30 (Bloomberg) -- PT Perusahaan Listrik Negara, Indonesia’s monopoly electricity distributor, is seeking to build power plants run on lower-energy coal as it anticipates falling supplies of the fuel with higher heating values.

Listrik Negara will use coal with a gross heating value below 3,800 kilocalories a kilogram for future projects, Helmi Najamuddin, the company’s head of the coal division, said in an interview. About 36 percent of Indonesia’s coal is classified as low-energy, which means it has less than 5,100 kilocalories a kilogram, according to energy ministry data.

“We plan to use much lower-calorific value as this type of fuel will be more available in the future,” Najamuddin said in the May 26 interview.

China, Indonesia’s top buyer, is considering a proposal to ban imports of low-heating value grades, potentially increasing domestic supply. The Southeast Asian nation’s use of the fuel for electricity generation is forecast to rise 13 percent next year to almost 83 million metric tons as new plants start. Nationwide electricity consumption will more than double in less than a decade, with coal accounting for two-thirds of its power capacity, according to data from the company.

The state-run company plans to invite investors to build two 115 megawatt power plants in Aceh on Sumatra island, using coal with 3,300 kilocalories a kilogram, Najamuddin said. He didn’t provide details on how much total capacity the company will build using low-energy supplies.

Indonesia’s coal use for electricity may climb to 151 million tons by 2022, according to data from Listrik Negara. About 66 percent of power generation will be fueled by coal in 2022, compared to 53 percent last year, the data show.

Rising Consumption

Nationwide electricity consumption is forecast to increase by 8.4 percent a year to reach 386 terawatt hours in 2022, from 189 terawatt hours in 2013, according to Listrik Negara’s electricity outlook for 2013-2022.

Listrik Negara plans to issue tenders this year for 2.5 million tons of coal annually for 5 to 20 years, to feed two new power plants and as existing deals expire, Najamuddin said. The company already has supply contracts for 85.5 million tons a year for the next two decades, he said.

“The company will still need to secure more coal as consumption may exceed contracted supplies,” he said.