Three Indonesian state-owned companies — coal producer Bukit Asam, utility PLN and rail operator Kereta Api Indonesia (KAI) — have signed an interim agreement aimed at strengthening cooperation on the country's coal supply chain.
The firms will collaborate to create a comprehensive study relating to cooperation schemes, business models, technical and operational partnerships, and other factors. The result of the study will serve as a guideline for delineating each company's role in the partnership.
The interim deal is a follow-up to an initial agreement signed between the three companies in August last year.
Bukit Asam will be responsible for supplying coal to PLN's power plants using KAI's railway system under the proposed partnership. The three companies are planning to have an operational system ready for deployment by 2025, with Bukit Asam supplying 20mn t/yr of coal to PLN under the terms of the proposal.
Bukit Asam said that the tripartite agreement will be a long-term project aimed at strengthening the country's national energy security. Jakarta said last year that it will start phasing out coal-fired power plants from 2030 but the process is expected to be drawn out as renewable energy investments are below the level required to offset power supply losses when coal-fired power plants are decommissioned. Bukit Asam and PLN think that coal will continue to play a significant role in Indonesia's energy mix at least in the next two decades.
The additional supply from the proposal will also serve as a security net in the event of issues in the delivery of coal from private-sector producers to power plants. Indonesia narrowly avoided two power crises in a span of a year in the first quarters of 2021 and 2022 because of a lack of coal deliveries to power plants. This resulted in a month-long export ban in January this year and institutional changes in both coal supply contracting and monitoring of coal deliveries.
