Envisioning Energy At A Mine-mouth

There is still a huge gap between the fulfillment and the expectation of domestic energy needs. The cause is thought to be that of energy sources located away from mining areas. Development of mine-mouth power plants has increasingly become a possible solution.

The Governor of Central Kalimantan, A. Teras Narang, was enthusiastic when he presented his ideas during a seminar in Jakarta on Saturday, 13 September 2008. He was accompanied in the seminar by Wahyudin Sitompul, an official at the local State Electricity Company (PLN in its Indonesian abbreviation). The two gentlemen were in a same mission; they came up to the country’s capital to unleash a mega-project on the interconnection for Java - Kalimantan power transfer.

Both confessed to a satisfaction over their presentations in front of the country’s high-level officials. To this end, Mr. Narang along with three other provincial leaders in Kalimantan had splashed a large amount of cash to organize the seminar. Hundreds of participants, most of them of regional bureaucrats, swarmed the Sultan hotel at the center of the country’s capital to be in attendance in the seminar’s discussions.

Mr. Narang took the chance to offer his vision as a regional leader in a speech during the seminar. He mentioned that the abundance of low calorie coal should primarily be devoted to the country’s energy requirements, instead of to the international market. He also pleaded that all stakeholders keep in mind that coal is a non-renewable energy resource. Its ultimate use should fully be aimed to support the country’s development programs.

In an interview with Majalah TAMBANG, Mr. Narang said that the development of mine-mouth power plants is highly viable. He based his statement on a local PLN’s finding which reveals that a per KwH energy would be very much cheaper if a power plants are built next to the coalmines. He laid out the fact that while unrelentingly complaining on providing too high a subsidy to stabilize the national energy price, the central government has been giving too little attention to energy at the mine-mouth proposals.

“Just develop as much mine-mouth power plants as possible. However big the demand from Java is, (they would be prepared) to provide,” he said. He challenged the central PLN’s lasting argument that an energy transmission line to Java is more expensive than inter-islands coal shipping costs. He readily offered a more likely calculation, backed with the unreliable weather situation at the Java sea recently that has proven to be the hindrance to smooth inter-island shippings.

He added that with the most recent technology advances, the energy supply from mine-mouth power plants is very much on the cards. There now remains only the classic issue of whether the government would be willing to consider the new option or to keep the inefficient, extravagant- ongoing practices.

“Central Kalimantan is ready for mine-mouth power plants,” Mr. Narang said in the seminar. To the participants, he explained that there are several spots throughout the province to be chosen as potential energy suppliers for Java island. The province’s Kota Waringin and Kapuas regencies, for instance, are only 310 and 315 kilometres away to Semarang, Central Java and Surabaya, East Java, respectively. This would mean in the perspective of a distance, an interconnection for Java-Kalimantan power transfer is indeed workable.

It is estimated that a Kalimantan - Java mine-mouth power plant interconnection would require a mere 2.3 billion rupiahs, with a break-even point already predicted right after the initial year.

As a conclusion to his speech, Mr. Narang invited all stakeholders to contemplate on the nation’s long-term strategic interests, of 10 to 20 years ahead. “Central Kalimantan is ready to seriously strive for our great nation’s gain. It’s now down to the central (government) to show the same determination,” said the Governor.

The Oddity in the 10.000 MW Energy Project
Meanwhile, a harsh viewpoint was expressed by former South Sumatera Governor, Syahrial Oesman. He pointed to the country’s power policy inconsistency. “South Sumatra was once appointed as the nation’s energy powerhouse. However, the 10.000 MW energy project is to be kicked off in Java,” he said in front of participants at the Association of Indonesian Mining Professionals (PERHAPI) annual gathering in the Horison Hotel in Palembang, South Sumatera on Friday, 25 July 2008.

He mentioned that there is an oddity in the project set off by the VP Jusuf Kalla. Elsewhere in the world, power plants are built at energy sources’ vicinity rather than of the users. South Sumatera is geared-up for a 7,000 MW electricity supply in the initial Sumatera - Java interconnection. Moreover, the province is blessed with the abundance of low-calorie coal, the power plant’s main element, beside of ore and sulphur reserves.

Mine-mouth power plants at the province are already planned the regencies of Banjar Sari (2 x 100 MW), Banko Tengah (4 x 600 MW), Adimas Baturaja Cemerlang (2 x 100 MW), MUBA (2 x 100 MW), MURA (2 x 100 MW), Musi Prima Coal (2 x 100 MW), Sungai Malam (2 x 600 MW and 3 x 100 MW), Muara Enim (4 x 100 MW), Gunung Megang (2 x 100 MW), and Lahat (4 x 600 MW).

“The permit (to commence the development) was never given,” said Mr. Oesman, who stated that all proceedings were already initiated as early as 2005. “All of a sudden, then came the policy to develop (the project) in Java,” revealed the gentleman who lost his incumbency as the province’s Governor last month.

Mr. Oesman asserted that the 10.000 MW project would be much cheaper if developed in South Sumatra. “Coal delivery expenses from Kalimantan to Java in two years time would be enough to develop a Sumatra - Java transmission line,” he said before put out the estimated cost in the region of 1.5 billion rupiahs.

He also stated that in a year the Java sea would only be navigable for a maximum three-month. Earlier this year, operations at Tanjung Jati B power plant at Cilacap, Central Java were halted due to delayed coal delivery thanks to hostile seawater.

The Pursuit of a Grand Scenario
Similar to Mr. Oesman, Jeffrey Mulyono, Chairman of the Indonesian Coal Mining Association (APBI in its Indonesian abbreviation) were downbeat when confessing that on several occasions, he sneered at the PLN for constantly putting sub-standard bargains on the electricity price in previous Java - Sumatera interconnection negotiations. He felt sorry that until now an inter-island transmission line in the country is still lacking.

“To me, it is as if the PLN prefers to continuously burn out diesel fuel,” he said in an interview with Majalah TAMBANG on 18 September 2008, in reference to the state electricity company’s reluctance to immediately consider the option. “If mine-mouth power plant is already at hand now, we can develop (the transmission line) anytime,” added Mr. Mulyono, who also stated that obstacles to the development should not end all initiatives.

He envisioned that the development of mine-mouth power plants in Kalimantan island should be integrated in an industrial areas development scheme. A grand scenario of mine-mouth power plants development, followed by the launching of nearby industrial areas would enhance economy and business growth in the region. This would create a vast job opportunity for the country’s workforce. A train line expansion in the island would also call for a huge need of electricity apart of the demand from the surrounding areas.

Mr. Mulyono praised some mining companies who already instigated their mine-mouth power plants development, such as of PT Adaro Indonesia and Indominco, as well as of Gorontalo and PT Berau Coal, whose small-scale mine-mouth power plants are designed for their own electricity demands. “I’d like to reiterate that mine-mouth power plant is really positive,” added Mr. Mulyono, “If the utilization is broadened, the multipying effect would be overwhelming”.

The Misfortune at Energy Powerhouses
The demand for mine-mouth power plants has increasingly become apparent. Syahrial Oesman is not the only regional leader whose inquiry for energy sources at mine-mouth was rejected by the central government.

As revealed in this magazine’s March 2008 edition, South Kalimantan Governor Rudy Arifin sent a letter to the Minister of Energy and Mineral Resources (ESDM in its Indonesian abbreviation), with copies to the President, the Vice President and the Chairman of the parliament’s Seventh Commission.

The February 2008 letter slammed the then energy crisis at South and Central Kalimantan provinces, which came along after a curtail policy was imposed on the region’s coal. Electricity for residential and industrial purposes was unsteady at best, threatening the regions’ conducive climate for investment. This happened amid both provinces’ claim as the country’s top coal producers.

Of the operational plants in the region, the provinces’ had to do with only 260 MW electricity. Coal producers there preferred to offload their products to markets outside the region which offered a more promising selling price. “We will produce a law to regulate the region’s big mining companies to build power plants in our vicinity as part of their CSR” wrote Mr. Arifin in the letter. The mining giants would then be required to sell their electricity to the local PLN with a cut-off price, hence residents and industries alike could get a steady supply of electricity at a cheap price. The move was proven effective as several big names readily committed themselves to the power plants development.

During a seminar on coal exploitation in Jakarta on 13 September 2008, the Executive Director of APBI, Supriatna Suhala stated that mine-mouth power plants should be seen as a prioritized matter. He said that Kalimantan as the country’s energy powerhouse should be developed not only into primary energy provider area, but also into secondary energy provider area which could acquire a steady, cheap electricity.

This is based on Kalimantan’s coal reserve, accounted at 53 percent of the total national reserve. The island contributed a total of 91 percent of the national coal production in 2007, 52.3 percent of which was obtained from East Kalimantan and 35.7 percent from South Kalimantan. “Investment climate there should be more competitive than other regions, among other through the supply of cheap electricity,” said Mr. Suhala.

M.S. Marpaung, Director of Technique and Environment at the ESDM Ministry astoundingly provided some figures which show that coal from four provinces in Kalimantan had supported a steady electricity supply for at least a fifth of the world’s territory. Millions of tons of coal were shipped to world’s regions as far as China, India, Malaysia, Hongkong, Japan and Korea. All the while, the island’s residents should consent for a very inadequate electricity supply.

“It is wrong if we do not concentrate on (the development of) new power plants in Kalimantan,” said Mr. Marpaung to our reporters, early September. He further said that the current injustice should be put to an end, once and for all. Kalimantan should be made into a coal powerhouse, not only to fulfil the current needs of steady electricity supply, but also for the needs of the nation’s generations to come, he was further quoted as saying.