Study on Coal-Fired Power Plant in Anyer, The Republic of Indonesia

Study on Economic Partnership Project

in Developing Countries in FY2014

Study on Coal-Fired Power Plant in Anyer, The Republic of Indonesia

Final Report

February 2015

Prepared for: Ministry of Economy, Trade and Industry

Ernst & Young ShinNihon LLC

Japan External Trade Organization

Prepared by:

E&T Research Institute, Inc.

Reproduction Prohibited

Preface

This report contains a summary of research outcomes gained from a “FY2014 Research Project to Help

Promote Installation of Infrastructure/Systems of Energy Supply-Demand Mitigation Type (Fact-finding Study on

the Formation of A Yen-loan/Private-fund-based Project, Etc.) awarded by the Ministry of Economy, Trade and

Industry as one of its FY2014 projects to E&T Research Institute, Inc. (contractor) and ASAHI Glass Co., Ltd.

(co-proposer).

This research, entitled “Indonesia: A Feasibility Study on Construction of the ANYER Coal-fired Power

Station,” is designed to examine the feasibility of a project planned for ASC Co., Ltd, a chlor-alkali maker of the

largest class in Southeast Asia and a consolidated subsidiary of ASAHI Glass. The project, in which a coal-fired

power generation capacity will be introduced into the site of ANYER plant owned by ASC, is expected to allow

ASC to secure captive power resources while making a great contribution to easing the local electricity

supply-demand balance problems in the plant’s adjoining areas.

We sincerely hope this report would be found informative for all the parties concerned in this country and be

helpful in realizing the planned project.

February 2015

E&T Research Institute, Inc.(contractor)

ASAHI GLASS CO., LTD.(co-proposer)

Project Map

Source : Google earth

Abbreviation List

Abbreviations Official name Japanese translation

AMDAL Analisis Mengenai Dampak Lingkungan

(Environmental Impact Assessment)

環境影響評価

ANDAL Analisis Dampak Lingkungan Hidup

(Environmental Impact Analysis)

環境影響分析（EIA の一部）

BAKOREN Badan Koordinasi Energi Nasional

(National Energy Adjustment Committee)

国家エネルギー調整委員会

BAPEDAL Badan Pengendalian Dampak Lingkungan

(Emvironmental Impact Management Agency)

環境管理庁（2000 年に廃止、

BPLHD に移管）

BAPPEDA Badan Perencana Pembangunan Daerah

(Regional for Planning and Development Agency)

地方開発企画庁

BPLHD Badan Pengelolaan Lingkungan Daerah (Regional

Environmental Agency/Department of Environment)

インドネシア地方政府の環境管

理局/環境部

BPPT

Badan Pengkajian dan Penerapan Teknologi

(Agency for the Assessment and Application

of Technology)

インドネシア技術評価応用庁

BKPM Badan Koordinasi Penanaman Modal 投資調整庁

CCT Clean Coal Technology クリーンコールテクノロジー

CFB Circulating Fluidized Bed 循環流動層ボイラ

CFPP Coal-Fired Power Plant 石炭火力発電所

COP Conference of the Parties 気候変動枠組み条約締約国会議

CMP Conference of the parties serving as the Meeting of

the Parties to the Kyoto Protocol

京都議定書締約国会合

CoW Contract of Work 鉱業事業契約

CCoW Coal Contract of Work 石炭鉱業事業契約

DEN Dewan Energi Nasional

(National Energy Council)

国家エネルギー審議会

DGE Directorate General of Electricity 電力総局

DMO Domestic Market Obligation 国内供給義務

EIA Environmental Impact Assessment 環境影響評価

ESDM Kementerian Energi dan Sumber Daya Mineral

(Ministry of Energy and Mineral Resources)

エネルギー鉱物資源省

FS Feasibility Study 事業性の評価

HBA Harga Batubara Acuan (Coal Price Refence) 石炭基準価格

HPB Harga Patokan Batubara (Benchmark Coal Price) 標準炭価格

ICI Indonesia Coal Index インドネシア石炭価格指標

Abbreviations Official name Japanese translation

ICMA Indonesia Coal Mining Asociation インドネシア石炭鉱業協会

ICPR Indonesia Coal Price Reference インドネシア石炭価格基準

IEA International Energy Agency 国際エネルギー機関

IPP Independent Power Producer 独立系発電事業者

IUP Izin Usaha Pertambangan

(Mining Business License)

鉱業事業許可

IUPK IUP Khusus

(Special Mining Business License)

特別鉱業事業許可

IUPTL Izin Usaha Penyediaan Tenaga Listrik

(Power Supply License)

電力供給事業ライセンス

IO Izin Operal（operating license）操業ライセンス

JICA Japan International Cooperation Agency 国際協力機構

MEMR Ministry of Energy and Mineral Resources エネルギー鉱物資源省

MOE Ministry of the Environment 環境省

PLN PT Perusahaan Listrik Negara

(State Electricity Company)

国有電力会社

PPA Power Purchase Agreement 電力売電契約

PPU Private Power Utilities 電力供給事業者

RTRW Rencana Tata Ruang Wilayah

(Sapcial Plan)

空間計画

RUEN Rencana Umum Energi Nasional

(National Energy Plan)

国家電力総合エネルギー総合計

画

RUKN Rencana Umum Ketenagalistrikan Nasional

(General National Power Plan)

国家電力総合計画

RUPTL Rencana Umum Penyediaan Tenaga Listrik

(Electrical Power Supply Plan)

電力供給事業計画

SC Super Critical 超臨界圧

SPC Special Purpose Company 特別目的会社

Sub-C Sub Critical 亜臨界圧

USC Ultra Super Critical 超々臨界圧

WU Wilayah Usaha

（business area）

事業エリア

Table of Contents

Preface

Project Map

Table of Contents

Abbreviation List

Executive Summary ................................................................................................................................................... 1

(1) Project’s Background, Needs and Others ........................................................................................................ 3

1) Public background and necessity of the project ............................................................................................ 3

2) ASC’s Business Environment ....................................................................................................................... 3

a) Electricity tariff increases .......................................................................................................................... 3

b) Power balance crisis becoming conspicuous ............................................................................................. 4

3) ASC’s business plans .................................................................................................................................... 4

(2) Basic policy applied when determining project’s contents .............................................................................. 4

(3) General Descriptions of the Project ................................................................................................................. 6

1) General Descriptions of the Project .............................................................................................................. 6

2) Project Cost ................................................................................................................................................... 7

a）Construction costs (design, procurement, construction works: EPC) ...................................................... 7

b）Initial investment cost .............................................................................................................................. 8

c) Running costs ............................................................................................................................................ 9

3) Major Results of Preliminary Financial/Economic Analysis ........................................................................ 9

4) Evaluation of Environmental and Social Impacts ....................................................................................... 10

a) Status-quo Analysis on Socio-Environmental Aspects ............................................................................ 10

b) Improved Enviroment Expected from the Project ................................................................................... 10

c) Project’s Impacts on Socio-Environmental Aspects ................................................................................ 10

d) Outline of Host Country’s Laws Related to Socio-environmental Cares and Essential Measures

Required for Observance ..............................................................................................................................11

e) Vital Matters to Be Done by the Concerned Entities in the Host Country for Successful Project ............11

(4) Project Schedule ............................................................................................................................................ 11

(5) The feasibility for the implementation ........................................................................................................... 12

(6) Superiority in Japanese companies technical, etc. ......................................................................................... 12

(7) Map of the project site ................................................................................................................................... 13

Chapter1 Overview of the Host Country and Sector ............................................................................................... 15

(1) Overview of the target sector of project......................................................................................................... 17

1) Energy Policy .............................................................................................................................................. 17

a) New National Energy Policy (New KEN) (2014) ................................................................................... 18

b) Major Laws on Energy & Electricity ...................................................................................................... 20

2) Energy Demand and Price Trends .............................................................................................................. 20

a) Generated Output ..................................................................................................................................... 20

b) Electricity Sales Amount ......................................................................................................................... 21

c) Electricity Outlook .................................................................................................................................. 22

d) Electricity Supply Plan ............................................................................................................................ 23

e) Electricity Tariffs ..................................................................................................................................... 25

f) Industrial Electricity Tariff Increases/Automatic Tariff Adjustment System ........................................... 25

g) Government Subsidies to PLN ................................................................................................................ 25

h) State of PLN Management ...................................................................................................................... 27

3）Structure of Energy-related Industries....................................................................................................... 27

a) Outline of Electric Utility Industry .......................................................................................................... 27

b) The Ministry of Energy and Mineral Resources (MEMR) ...................................................................... 28

c) State-run Electric Utility (PLN) ............................................................................................................... 29

d) IPPs (Independent Power Producers) ...................................................................................................... 30

4) Generating Facilities and Network Systems: Status-quo and Plans ............................................................ 31

a) Nation’s General Electricity Plan (RUKN) and Electricity Supply Service Plan (RUPTL) .................... 31

b) Two Crash Programs ............................................................................................................................... 33

c) Investment Needs .................................................................................................................................... 35

5) Trend about the Coal Resources ................................................................................................................. 36

a) General Descriptions of Coal Resources in Indonesia ............................................................................. 36

b) Relevant Moves to Mining Act in Indonesia ........................................................................................... 41

c) Indonesian Coal Production Trends ......................................................................................................... 55

d) Transport Means from Coal-producing to Consuming Areas .................................................................. 56

(3) Situation in the target area ............................................................................................................................. 61

1) Development Risks ..................................................................................................................................... 61

a) Conditions of the Domestic Economy ..................................................................................................... 61

b) Exchange Risks ....................................................................................................................................... 62

c) Natural Disasters...................................................................................................................................... 63

d) Policy Changes ........................................................................................................................................ 63

e) Riots and Other Anti-social Actions ........................................................................................................ 64

2) Environment around the proposed project site ............................................................................................ 66

Chapter2 Study Methodology .................................................................................................................................. 68

(1) Contents of FS works ..................................................................................................................................... 70

1）FS contents ................................................................................................................................................ 70

2）FS target .................................................................................................................................................... 70

(2) Research methodology/system....................................................................................................................... 72

1）Research methodology .............................................................................................................................. 72

2）Research system ........................................................................................................................................ 72

(3) Research schedule .......................................................................................................................................... 72

Chapter3 Justification, Objective and Technical Feasibility of the Project ............................................................. 74

(1) Project’s Background, Needs and Others ...................................................................................................... 76

1) Public background and necessity of the project .......................................................................................... 76

2) ASC’s Business Environment ..................................................................................................................... 76

a) Electricity tariff increases ........................................................................................................................ 76

b) Power balance crisis becoming conspicuous ........................................................................................... 77

3) ASC’s business plans .................................................................................................................................. 77

(2) Upgrading and Rationalization of Energy Use ................................................................................... 79

(3) Multi-Angle Examinations Necessary for Deciding Project’s Contents and Others .................. 80

1) Outline and Particulars of Relevant Regulations/Policies ........................................................................... 80

a) Electric Utility Industry System .............................................................................................................. 80

b) Electricity Act .......................................................................................................................................... 80

c) Legal system of the New Electricity Act ................................................................................................. 82

2) Details of relevant regulations/policies ....................................................................................................... 85

a) Outline of the regulations ........................................................................................................................ 85

b) Regulations applicable to IPP .................................................................................................................. 85

c) Regulations applicable to PPU ................................................................................................................ 86

3) Views held by relevant offices .................................................................................................................... 89

a) Summary .................................................................................................................................................. 89

b) The Ministry of Energy and Mineral Resources (MEMR): General Bureau of Electricity ..................... 89

c) PLN: Officer in charge of Power System Planning ................................................................................. 90

d) PLN：Marketing Division ...................................................................................................................... 91

e) Cilegon City: Mining Energy Division, Cooperative Bureau for Commerce & Industry ....................... 93

4) Demand Outlook ......................................................................................................................................... 95

a) Indonesia’s electricity supply-demand outlook ....................................................................................... 95

b) ASC’s electricity demand outlook ........................................................................................................... 95

3) Procurement of fuel ..................................................................................................................................... 96

a) General Descriptions of Indonesian Mines .............................................................................................. 96

b) Selection of Mines as Potential Suppliers ............................................................................................... 98

(4) General Descriptions of the Project Plan ..................................................................................................... 105

1) Basic policy applied when determining project’s contents ....................................................................... 105

2) Contents of the proposed project .............................................................................................................. 110

a) Appraisal bases/preconditions ................................................................................................................110

b) Business model .......................................................................................................................................112

c) Technology .............................................................................................................................................113

3) Conceptual design and specifications of candidate equipment ................................................................. 117

a) Site and major equipment .......................................................................................................................117

b) Generated output and type of the power plant ....................................................................................... 120

c) Steam conditions and others .................................................................................................................. 120

d) Coal calorific value ............................................................................................................................... 121

e) Annual coal requirements ...................................................................................................................... 121

f) Coal stocks ............................................................................................................................................. 121

g) Ash dumping yard ................................................................................................................................. 121

h) Water intake/discharge .......................................................................................................................... 121

i) Specifications (a summary) .................................................................................................................... 122

4) Subjects accompanied when employing the proposed technologies/systems and their solutions ............. 123

Chapter4 Evaluation of Environmental and Social Impacts .................................................................................. 124

(1) Status-quo Analysis on Socio-Environmental Aspects ................................................................................ 126

1) Analysis of status-quo ............................................................................................................................... 126

a) Status-quo of environmental problems .................................................................................................. 126

b) Land use/development (environment around the proposed project site) ............................................... 127

2) Outlook (Without the project implemented) ............................................................................................. 129

(2) Improved Enviroment Expected from the Project ....................................................................................... 131

1) Comparison of CO2 emissions per unit .................................................................................................... 131

a) Indonesian Grid ..................................................................................................................................... 131

b) the target project (Case 1, Case 2) ......................................................................................................... 131

2) annual CO2 emission reduction ................................................................................................................ 131

(3) Project’s Impacts on Socio-Environmental Aspects .................................................................................... 133

1) Items checked for socio-environmental reasons ....................................................................................... 133

a) Permits/explanations .............................................................................................................................. 133

b) Pollution control measures .................................................................................................................... 134

c) Natural environment .............................................................................................................................. 136

d) Social environment ................................................................................................................................ 137

e) Others .................................................................................................................................................... 139

2) Examinations of the project compared with other options ........................................................................ 140

3) Outcome of information gathering on socio-environmental impacts ........................................................ 140

(4) Outline of Host Country’s Laws Related to Socio-environmental Cares and Essential Measures Required for

Observance ........................................................................................................................................................ 141

1) Outline of socio-environmental cares-related laws involved in project implementation .......................... 141

a) Environmental management and environmental impact assessment ..................................................... 141

b) Space planning ...................................................................................................................................... 142

c) Major laws on environmental measures/stndards .................................................................................. 142

d) Emission standards applicable to fossil fuels-fired power plants .......................................................... 144

2) EIA’s Contents and others required by the host country before project implementation ......................... 146

a) Applications/approvals .......................................................................................................................... 146

b) Organization of AMDAL documents .................................................................................................... 147

(5) Vital Matters to Be Done by the Concerned Entities in the Host Country for Successful Project .............. 148

Chapter5 Financial and Economic Evaluation ....................................................................................................... 150

(1) Integration of project costs........................................................................................................................... 152

1）Construction costs (design, procurement, construction works: EPC) ..................................................... 152

2）Initial investment cost ............................................................................................................................. 153

3) Running costs ............................................................................................................................................ 154

(2) Major Results of Preliminary Financial/Economic Analysis ....................................................................... 156

1）Financial internal rate of returns (FIRR)） ............................................................................................. 156

2）Economic internal rate of returns (EIRR) ............................................................................................... 160

3）General appraisal ..................................................................................................................................... 160

Chapter6 Planned Project Schedule ....................................................................................................................... 162

Chapter7 Implementing Organizations .................................................................................................................. 166

(1) Competent Organizations of the Host Country ............................................................................................ 168

(2)Participating Entities in the Project ............................................................................................................... 168

1) Project development stage ........................................................................................................................ 168

2) Project implementation stage .................................................................................................................... 169

Chapter8 Technical Advantage of Japanese Companies ....................................................................................... 170

(1) Participation form of Japanese companies that are assumed (investment, equipment supply, facilities

operation and management, etc.) ....................................................................................................................... 172

1) Investment ................................................................................................................................................. 172

2) Equipment supply ..................................................................................................................................... 172

3) Operation and management of the facility ................................................................................................ 173

(2) Superiority of Japanese companies during the project implementation (technical, economic) ................... 174

1) Technical Superiority ................................................................................................................................ 174

2) Economic superiority ................................................................................................................................ 174

a) The loan limit for coal-fired power plant ............................................................................................... 174

b) Efforts of Japanese government and governmental agencies ................................................................ 176

(3) Measures necessary in order to facilitate the orders of Japanese companies ............................................... 177

Executive Summary

3

(1) Project’s Background, Needs and Others

1) Public background and necessity of the project

In Indonesia, while the power demand increases steadily with economic growth, it has fallen into serious power

shortage due to a delay of the development of power supply and the power transmission & distribution network.

According to the power supply business plan of PLN (RUPTL, 2013 Edition), through 2013-2022, power demand

in Indonesia will increase from 189TWh to 386TWh for 2022. The increase rate of power demand will be 8.4% at

annual rate. To meet this demand for electricity, the country requires additional power generation capacity of

59.5GW until 2022, but 17.1GW (29%) among this is in the situation that is not decided prospect of development.

For this reason, the Indonesian government has announced a policy to accelerate the development of power

supply and the power transmission & distribution network, including the coal-fired power plant, and the

government is welcoming the introduction of foreign capital in such capital investment. In order to strengthen

power development, the government recommends not only power generation by PLN, but also IPP, PPS (Private

Power Utility) by the private sector.

On the other hand, Japanese companies, has the technology and know-how of the operation management (O &

M) for the coal-fired power plants, such as super critical pressure (SC), and superior hardware technology,

including the circulating fluidized bed (CFB). In addition, it is possible to take advantage of Japan's public finance

for foreign investment.

This project, using these technical and financial resources of Japan, and taking advantage of usgin premises of

Asahimas Chemical Anyer factory located in West Java Cilegon City (ASC, Inc.), aims to built 600/450 MW scale

coal-fired power plant construction, suppling part of the power to PLN to contribute to Indonesia's power supply

and demand relaxation, contributing to formation of Japanese infrastructure projects, and strengthen the

international competitiveness of manufacturing industries.

2) ASC’s Business Environment

Asahimas Chemical (ASC) Co., a consolidated subsidiary of ASAHI Glass Co., Ltd., is an Indonesia-based

chlor-alkali manufacturer of the largest class in Southeast Asia and engaged in integrated manufacturing from

caustic soda/chlorine to polyvinyl chloride. Due to the below-described background, how to secure electric

power resources has become a matter of pressing need for the company, which is now forced to confirm and verify,

as soon as possible, specific methodologies and feasibility of power plant projects counted as viable options.

a) Electricity tariff increases

In Indonesia, the electricity price has been set low in policy terms. But, given red-ridden management of the

state-run electric utility (Perusahaan Listrik Negara Persoro: PLN), electricity price hikes were decided in January

2014, though the price-increase targets were limited to large industrial customers alone. Based on the decision,

from 2014 through 2015, the tariff increases are scheduled as follows;

・Power Contract Category 14 (over 30KVA)/some 60 companies: up 65%

・Power Contract Category 13 (over 20KVA)/listed companies: up 39%

For ASC (falling in Category 13), the tariff hikes are worried to produce grave effects on its business

operations.

4

b) Power balance crisis becoming conspicuous

Because Indonesian efforts to install power infrastructure fail to catch up with its surging electricity demand

from 2015 on, a power balance crisis is becoming conspicuous, thus creating an additional worrying condition to

the above-mentioned cost-up problem which should be overcome by some means.

3) ASC’s business plans

As a result of the vigorous economic growth across the region, Southeast Asia is expected to mark long-run

expansion of demand for basic chemical products, indispensable goods for infrastructure. Backed by the strong

demand, ASC is planning to bolster its production capacity. By 2015 yearend, with additional capacities installed,

the company’s production capacity of caustic soda (already expanded to about 500,000 tons/year in March 2014)

will increase to some 700,000 tons/year, up 40% over the current level, and that of polyvinyl chloride (PVC) will

almost double to about 550,000 tons/year.

Asahimas Chemical Co., currently producing the products cited below, has done a decision-making that its

caustic soda production capacity should be expanded to 700,000 tons/year by the end of 2015.

・Caustic soda (NaOH) : Rayon, soaps/detergents, paper/pulp, chemicals

・Vinyl chloride monomer (VCM) : PVC feedstock

・Polyvinyl chloride resin (PVC) : PVC pipes, films, electric wire coatings

Because the electrolytic equipment to produce caustic soda and chlorine, the latter being PVC feedstock, is

characterized by heavy weight held by electricity cost, the above-discussed recent condition (rising

electricity-price problem) is now reckoned as a crucial subject that can pose so serious impediments to the

company’s business development that it should be solved quickly and effectively.

For these reasons, ASC plans to offer its captive site for the proposed project of coal-fired power construction in

hopes to receive from the power plant, after it is built, less expensive power supply than that from PLN (state-run

electric utility).

(2) Basic policy applied when determining project’s contents

When FS works were proposed on the formation of this project, etc., the technology model and output assumed

for the project were USC and 600,000kW in reference to coal-fired power plants currently in operation in Japan,

which includes Unit No. 5 (600,000kW; USC; bituminous coal-fired; main vapor temperature set at 600℃;

commissioned in July 2004) and Unit No. 6 (600,000kW; USC; bituminous coal-fired; commissioned in

December 2013) at Hirono Plant run by Tokyo Electric Power Co. (TEPCO).

As for coal ranks, assumed at the onset were a wide range of coal ranks, including Indonesia’s

indigenously-produced bituminous and subbituminous coals and overseas ones.

In the subsequent research process, through such efforts as literature studies and interviews made to JCOAL

and others, it was found that Indonesia’s energy policy positioned bituminous coals chiefly as exportable goods

and attached the importance to subbituminous coals for domestic use. In price terms, the use of subbituminous

coals was found reasonable as well.

Also, from the interview survey made to PLN last November, a suggestion was gained that a designed output of

USC, if fired by Indonesian subbituminous coals, needs to be more than 800,000 kW at least.

5

On top of it, literature survey results showed that, concerning USC fired by Indonesian subbituminous coals,

there were plans for building a plant of over a million kW in terms of single-unit capacity, but plans for a

single-unit capacity construction of under a million kW were completely absent (→See the References below.)

Also, hearing from the Japanes experts and referring technical literature, we found that when using the juicy

Indonesian sub-bituminous coal, since the corrosion of the material is likely to proceed at high temperature and

high pressure, requires expensive materials to prevent corrosion, scale output scale of one million kW (1,000

MW) class is necessary.

From these results, it is found that a 600,000-kW USC running on Indonesian subbituminous coals is thought

not impractical at all in technical terms. Yet, without any records of actual operation nor planning, USC of over

600,000 kW is filled with unknown risks as a proven unit, which intensifies its character as a demonstration unit.

Consequently, with the use of Indonesian subbituminous coals premised, this FS is designed to cover not only

USC (Ultra Super Critical) but also including SC (Super Critical), Sub-C (Sub-Critical) and CFB (Circulating

Fluidized Bed).

6

(3) General Descriptions of the Project

1) General Descriptions of the Project

a) Type of utility: PPU（Public Power Utility）

・Statutory basis: New Electricity Act (Article 9-a, among others)

b) Power producer: SPC

・Part of generated output is retailed from SPC to ASC via distribution lines within its plant site.

・In parallel, part of generated output is sold from SPC to PLN.

c) Scale (generated output & retailing/power-selling capacities)

・Generated output: 450/600 MW

・Retailed from PPU (SPC) to ASC: 275 MW

・Power sold from PPU(SPC) to PLN: 150/300 MW

Fig. 1 Power System Configuration

ASCPower LoadG

PLN Grid : 150kV

Normal Operation

SW：ON SW：OFF

SW：ON SW：ON

ASCPower LoadG

PLN Grid : 150kV

During periodic inspectionand emergency

SW：OFF SW：ON

SW：OFF SW：ON

Backup

PPU PPU

275MW

150／300MW

275MW

450／600MW

d) Technology types

【Case 1】

・Technology: SC (Super Critical)

・In general, the main steam temperature of supercritical (SC) is 566 ℃ or less, and the main steam

temperature of ultra-supercritical (USC) over 566 ℃. The main steam temperature of this plant is

566 ℃, so by definition this is supercritical (SC), but it is close to ultra-supercritical (USC).

・Output: 600,000 kW x a unit = a total of 600,000 kW

・PPU (SPC) retails 300,000 kW to ASC, and sells the remaining 300,000 kW to PLN.

7

・Because ASC’s power load lasts 24 hours in principle and remains stable relatively, the amount of

power sold to PLN stays constant except the periodical inspection time stated below. In other words,

ASC can be a reliable power supply source for PLN.

・Backups during periodical inspection time: Backups equivalent to 300,000 kW (to cover ASC’s power

needs) is offered by PLN.

【Case 2】

・Technology: CFB (Circulating Fluidized Bed)

・CFB may also be applied to sub-bituminous coal of Indonesia of low calorific value.

・Output: 150,000 kW x 3 units = a total of 450,000 kW

・PPU (SPC) retails 300,000 kW to ASC, and sells 150,000 kW to PLN

・Because ASC’s power load lasts 24 hours in principle and remains stable relatively, the amount of

power sold to PLN stays constant except the periodical inspection time stated below. In other

words, ASC can be a reliable power supply source for PLN.

・Backups during periodical inspection time: During a periodical inspection, a unit (150,000 kW) alone is

halted and power sale to PLN is also suspended. In other words, ASC’s plant load (300,000 kW) is

covered with the remaining two units (150,000 kW x 2 units = 300,000 kW).

2) Project Cost

a）Construction costs (design, procurement, construction works: EPC)

Tab. 1 Construction Costs (Case 1: SC 600,000 kW x a unit)

Item

Roughly estimated cost

In dollars

(US$ Mil.) In Rupiah (Bil. Rp) Total (US$ Mil.)

1 Boilers and environmental systems 197.8 439.9 232.8

2 Steam turbines and generators 130.1 289.3 153.1

3 Coal conveyor and ash treatment

systems 47.4 105.4 55.8

4 Electric/control equipment 36.6 81.4 43.0

5 Other incidental equipment 55.6 123.5 65.4

6 Civil engineering/installation works 77.9 173.3 91.7

7 Sub-total 545.5 1,212.8 641.7

8 Contingency (10% of sub-total) 54.5 121.3 64.2

9 Total 600.0 1,334.1 705.9

Exchange rate: US$1＝Rp.12,600

8

Tab. 2 Construction Costs (Case 2: CFB 150,000 kW x 3 units)

Item


In dollars





systems 31.6 115.7 40.8




7 Sub-total 346.1 1,266.2 446.6


9 Total 380.7 1,392.8 491.3

Exchange rate: US$1＝Rp 12,600

b）Initial investment cost

Tab. 3 Initial Investment Cost (Case 1)

Item


In dollars

（US$ Mil.） In Rupiah (Rp. Bil.) Total(US$Mil.)

1 EPC cost (see Tables 1, 2) 600.0 1,334.1 705.9

2 Substation (additional) 1.5 18.9 3.0

3 Sundry cost（1+2=5%） 30.1 67.7 35.4

4 Interest during construction 93.4 0.0 93.4

5 Total 725.0 1,420.7 837.8

Tab. 4 Initial Investment Cost (Case 2)

項目


In dollars


1 EPC cost (see Tables 1, 2) 380.7 1,392.8 491.3


3 Sundry cost（1+2=5%） 19.1 70.6 24.7


5 Total 455.2 1,482.3 572.8


9

c) Running costs

Tab. 5 Running Costs (Case 1)

項目


In dollars


1 Operation/maintenance 8.1 204.5 24.3

2 Fuel 0.0 1,517.8 120.5

3 Land 0.0 0.0 0.0

4 Premiums Include in 1 Include in 1 Include in 1

5 Interest payment 5.38%/8.00% 0.0 5.38%/8.00%

6 Corporate tax 0.0 25% 25%


Tab. 6 Running Costs (Case 2)

項目


In dollars



2 Fuel 0.0 886.2 70.3

3 Land 0.0 0.0 0.0





3) Major Results of Preliminary Financial/Economic Analysis

Calculation results put FIRR of the proposed project at 11.5% (Case 1) and 14.3% (Case 2).

These results considerably outstrip Indonesia’s long-term interest rate (7~9%), thus suggesting excellent

feasibility of this project.

As one of the reasons, it is attributable to that the project is free from the running cost incurring in land use,

because the site for power plant construction has already been secured by ASC. Among others, availability of

relatively inexpensive subbituminous coals abundant in coal-rich Indonesia can be cited.

On top of these, the project is expected to allow electric power procurement for much cheaper price than

offered by PLN and, through inverse current of power into PLN’s grids which are badly in need of electricity, the

project can contribute to alleviating Indonesia’s tightening electricity supply and demand.

10

In the meantime, while the calculations were made by setting the PLN’s purchase price cheap at 656 Rp/kWh

(approx. 6 cents/kWh) identical to that for in-house power producers’ surplus output, the price is actually settled

by bilateral negotiations with PLN. Considering the project’s contribution to mitigating PLN’s grid problems, a

likelihood is that a higher price can be settled by negotiations. If so, with FIRR standing higher than calculated

this time, this project is likely to demonstrate even more excellent feasibility in economic terms.

4) Evaluation of Environmental and Social Impacts

a) Status-quo Analysis on Socio-Environmental Aspects

Building a new coal-fired power plant in Indonesia, though expected much to help easing the country’s tight

electricity supply-demand situations, is also feared as risk-prone, generally in such forms as worsening natural

environment, typcally air pollution, water pollution and greenhouse gas emissions, and the opposion by local

residents (due to undesirable changes caused to their office/living environment, land-expropriation troubles and so

on). Therefore, for successful implementation of the proposed project, adequate measures need to be taken by

putting such risk-prone subjects under careful consideration.

b) Improved Enviroment Expected from the Project

As an einvornment-improving effect of the proposed project, CO2 emissions from the proposed project

(coal-fired power generation: Case 1, Case 2) are estimated, of which outomes were compared with CO2

originating from tne Indonesian electrcity system.

① Comparison of CO2 intensity

In 2011, CO2 intensity of the Indonesian coal-fired power plants stood at 1,065 g-CO2/kWh.

In comparison, CO2 intensity of the proposed project was estimated at 856 g-CO2/kWh in Case 1

(600,000 kW, SC) and at 988 g-CO2/kWh in Case 2 (450,000 kW, CFB). Ovibiously CO2 intensity of the

proposed project will be lower than the average registered by Indonesia’s existing coal-fired power plants as

much as by 20% in Case 1, and by 7% in Case 2.

② CO2 reductions per annum

Focusing on Case 1 where larger CO2 reductions are likely, the calculation result shows that the proposed

project, if implemented, could reduce annual CO2 emissions by 1,026,012 t-CO2/year, that is, about 1.03

millon t-CO2/year.

c) Project’s Impacts on Socio-Environmental Aspects

In order to assess likely impacts produced by the proposed project on socio-environmental aspects and identify

a broad range of items subject to socio-environmental cares, which would be essential at the next stage of the F/S

works, examinations were made in reference to the “Check Lists” printed in JICA’s “Guidelines to

Socio-Environmental Cares” as well as the “Check Lists” in JBIC’s “Japanese Bank of International

Cooperation’s Guidelines to the Confirmation of Socio-Environemntal Cares.” As a result, the proposed project,

prudently planned based on a major premise that socio-environmental cares should be fulfilled by taking

adequated measures, is believed to have little grave environmental load nor produce negative impacts on the

society.

11

d) Outline of Host Country’s Laws Related to Socio-environmental Cares and Essential Measures Required for

Observance

n order to forward the proposed project in Indonesia, an environmental impact assessement (EIA) must be made

so as to show that the project meets major environmental requirements.

e) Vital Matters to Be Done by the Concerned Entities in the Host Country for Successful Project

While EIA preparation is under the jurisdiction of Cilegon City where the proposed project is located, the

project organizer or others responsible for the EIA preparation needs to make required applications/procedures

swiftly for obtaining any permits, approvals, licenses and whatever required.

(4) Project Schedule

The execution schedule of the project is as follows. This project is construction of the power plant executed in

existing plant premises. Therefore, there is no problem of concerning making the site safe. In addition, there are

too neither of problems concerning the influence on an environmental society, too. In other words, it is judged that

achievement that is smoother than the construction of a new power plant is possible.

Fig.2 Project Schedule

(Fiscal Year) 2015 2016 2017 2018 2019(Quarter) 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

detailed FS

detailed design

SPC Formation

Financing

IUPTL & WU

AMDAL

PPA with PLN

Coal Supply Agreement

EPC Selection and Contract

O&M Selection and

Contract

Construction

process

Plant Construction

(▲：Operation starting)

Planning

Securing of

resource

Obtaining of

permits

Contract

negotiation

Source: Study Team

12

(5) The feasibility for the implementation

Subject project FIRR (Case 1: 11.5%, Case 2: 14.3%), it greatly exceeded Indonesia in long-term interest rates

(7-9%), financial feasibility high of project.

The practice of the project, there is no significant neck in restricting surface. In WU acquisition required for

PPU, especially understanding of PLN is the key. Others, electricity sales fee to PLN, including the negotiation of

the contract period, the adjustment of the PLN is important.

Another key is the funding. Adjustment of the inside and outside of the investment institutions, including the

JBIC is important. At that time, understood in terms of profit margin (IRR, etc.) is considered to be obtained easily,

other Japanese companies involved degree, I considered such as electricity sales contract period to PLN is the

focus of the adjustment.

(6) Superiority in Japanese companies technical, etc.

Japanese companies, for supercritical pressure power generation equipment and CFB power plant, in technical,

I is thought to maintain the superiority against foreign companies.

Has been to form a technology related to critical pressure / CFB power generation in strict environmental

standards for many years in Japan, the art of power generation facilities by Japanese companies is at a high level

in the world, and has a rich delivery record.

Although there are competition with Asian companies in terms of cost, reliability is maintained to the Japanese

companies in the technical aspects, including the quality of the equipment and O & M.

13

(7) Map of the project site

Fig.3 Project Map

Source : Google earth

Chapter1

Overview of the Host Country and Sector

17

(1) Overview of the target sector of project

For a sustainable growth of Indonesia, how to deal with energy and power development is as important as

infrastructure projects, such as roads, ports and airports. Today, in Indonesia, where energy shifts are already

under way from reserves-depleting oil to coal and gas, it is predicted that, by around 2020, the country should

have no choice but to depend on coal in covering most of its energy needs. At the same time, environmental

pollution should remain unchanged as a big problem confronting the country. The dilemma of fossil fuels and

environmental pollution is partly attributable to the Indonesia’s fortune that the country is blessed with rich energy

resources.

For the government, to keep stable electricity supplies as much as required for enabling its economic growth is

a challenge of critical significance and, therefore, its energy policy comprises of stepped-up energy diversification,

more efficient energy use, energy pricing policy and environmental problems resulting from energy use as its

principal pillars. When considering its energy supply-demand and environmental problems, Indonesia, given its

vast territories, needs to take the plural number of approach with its lands divided into Java and non-Java, the

former responsible for 70% of the country’s total energy consumption. For instance, in non-Java where

electricity demand remains low, rural electrification is counted as the top priority. Also, measures are required to

help increase the use of renewable energy sources specifically fitting to given areas each.

In addition, because Indonesia’s energy consumption per GDP unit is five times more than Japan’s, to promote

efficient energy use (energy conservation) is a matter of vital importance. Particularly, most difficult is energy

pricing policy which involves electricity tariff increases. As for energy conservation, it is essential to endeavor

for enlightening the next-generation young through educational/public relations efforts.

1) Energy Policy

Indonesian energy policy is generally described below. In Indonesia, National Energy Policy (KEN) and

Nation’s General Energy Plan (RUEN) are mapped out at the policy level, while Nation’s General Electricity Plan

(RUKN) and Electric Utility Supply Service Plan (RUPTL) represent energy plans prepared at the electric utility

level.

Fig,1-1 Outline of Indonesian Energy Policy

National Energy Policy（KEN）

The latest version ： Version 2014

Nation’s General Energy Plan（RUEN）

（Under development）

Nation’s General Electricity Plan（RUKN）

（Under development）

Electric Utility Supply Service Plan（RUPTL 2013-2022）

The latest version ： Version 2013

Source: Study Team

18

a) New National Energy Policy (New KEN) (2014)

On January 28, 2014 a new national energy policy was approved by the parliament for the first time in ten years

and, on October 17, 2014, when signed by the former President Yudhoyono, the country’s basic policy law on

energy policy took effect. The newly-enacted New KEN was prepared by the National Energy Committee

(DEN), a council formed in 2009 under the Energy Act as a body to discuss comprehensive national energy policy.

It is chaired by the President and consists of 15 committees (7 from the Cabinet members, 8 from academics,

environmental specialists, consumer groups and industrial & engineering sectors).

New KEN specifies different shares to be held by different sources in total energy supply (energy mix) and puts

their numerical targets as shown below:

Oil: Under 25% in 2025, under 20% in 2050.

Natural gas: Over 22% in 2025, over 24% in 2050.

Coal: Over 30% in 2025, over 25% in 2050.

Renewable energy: Over 23% in 2025, over 31% in 2050

Among others, the nation’s energy policy targets were set forth as follows:

Energy elasticity (energy consumption growth/GDP growth): To keep elasticity in 2025 under 1 so as to

cope with the GDP growth target.

Energy intensity (energy consumption per GDP unit): To cut by 1% annually in the years to 2025.

Electrification rate: To be raised to 85% in 2015 and to nearly 100% by 2020.

Availability of residential gas use: To be increased to 85% in 2015.

Stance toward nuclear power plants: With nuclear power generation positioned as a final option, room for

possible introduction is left. It reflects the government’s long-cherishing recognition that the country

should be in need of nuclear introduction in the long run.

Exports of resources: In anticipation of growing domestic demand, exports of indigenously-produced coal

and gas will be curtailed in phases and, ultimately halted completely.

In its effort to envisage an energy shape from now on, the Ministry of Energy and Mineral Resources, based on

the New KEN framework, is currently preparing the RUKN (2015-2040), or a new version of Nation’s General

Electricity Supply Plan. Also, the Presidential Decree on the National Energy Policy 2006 and Energy &

Mineral Resources Ministry’s Vision 25/25, both prepared in the past, will be reviewed.

＜Reference: Presidential Decree on the National Energy Policy (2006)＞

In order to bolster the legal basis for the national energy policy, the Presidential Decree on the National Energy

Policy was promulgated by the President as a decree from the Executive Branch. According to it, on top of

energy elasticity (efficiency of energy use: energy consumption growth/GDP growth) to be kept under 1% by

2025, the government intends to promote the development of coal, natural gas and renewables so as to realize a

sharp cut in oil share in the primary energy supply mix. The planned primary energy mix by source is figured

out below.

19

Fig,1-2 President Decree-based Primary Energy Mix in 2025

４）バイオ燃料5%

５）地熱5%

７）液化石炭　2%

６）その他5%

新再生可能エネルギー

17%

１）石油20%

３）石炭33%

２）ガス30%

Source: Study Team (based on Presidential Decree on the National Energy Policy (2006))

＜Reference: Energy & Mineral Resources Ministry’s Vision 25/25 (2010)＞

The Vision 25/25, which was a plan announced in 2010 originally by the Ministry of Energy and Mineral

Resources, revised the planned share of renewables for 2025 sharply upward to 25% from 15% specified in

Presidential Decree of 2006. Also, the Vision put that energy consumption in 2025 should be trimmed by 15.6%

by virtue of energy conservation and diversification efforts compared with the case without any measures taken

(estimated to total 3.3 billion tons oil equivalent).

Fig,1-3 Primary Energy Mix in 2025 Planned by Vision 25/25

再生可能エネルギー

25%

ガス22% 石炭

23%

石油30%

Source: Study Team (based on Energy & Mineral Resources Ministry’s Vision 25/25 (2010))

Renewable energy

Oil

Natural gas Coal

Coal

Natural gas

Oil

Renewable energy

Bio fuel

geothermal

energy

Others

Liquefied coal

20

b) Major Laws on Energy & Electricity

①Energy Act (2007)

By 2007, without any laws capable of covering the whole of energy, Indonesia had an institution (legal system)

that allowed the government to control different energy sources by different laws, such as “Oil & Gas Act,”

“Electricity Act” and “Geothermal Act.” Because of the need for controlling the energy sector overall, the

government drafted on August 10, 2007 the “Law on Energy” (Energy Act), of which major provisions were

summarized below.

Energy resources to be controlled by the government (control/regulations)

Stable supply of energy (domestic supply preferred to exports)

Government subsidies granted to the poor

Promotion of resource development (domestic-procurement rate to be expanded)

Preparation of national energy policy (KEN)

Formation of national energy council (DEN)

Preparation of general energy plan (RUEN)(nationwide & by area)

Government supports for renewable energy supply/use and energy conservation efforts

②New Electricity Act (2009)

The “Law on Electricity” (2009 No.30) (New Electricity Act) was enacted on September 8, 2009. Generally

following the former Electricity Act (1985 No.15) enacted in 1985, the Act, while declaring that the government

takes the responsibility of electricity supply (“electricity supply services are under the national control and in

practice by the government”), provides that “in order to increase the nation’s electricity supply ability further, so

far as national interests are not harmed, other state-owned enterprises, public-run corporations, private firms,

cooperatives and citizen groups should be given the maximum possible opportunities for offering electricity

supply services,” thus opening room for private participation. In regard to relevant procedures, the preparation

of the nation’s general electricity supply plan (RUKN) and electricity tariff revision, of which rights have

conventionally been granted to the Energy & Mineral Resources Minister and/or the President, are now subject to

the approvals of the parliament (local parliaments in case of specific plans for specific local areas).

Originally it was decided under the “Law on Electric Utility Industry (New Electricity Act)” enacted in

September 2002, to implement “introduction of competitive market,” “splitting/privatization of the electric utility

industry,” “liberalization of electricity producing and retailing sectors,” “PLN’s control on

transmission/distribution systems,” “formation of a committee to supervise the electricity market and decision of

transmission/distribution tariffs by the committee,” “appointments of electricity system managers and electricity

market managers” and so on.

2) Energy Demand and Price Trends

a) Generated Output

PLN-involved total generated output in Indonesia as a whole (generated output by PLN+ purchased output by

21

PLN) has been changing as illustrated below. Compared with 93,325GWh in 2000, generated output nearly

doubled to 200,317GWh in 2012. Over the period Indonesia’s GDP growth was about 6.4% on average.

Fig,1-4 Indonesia’s Total Generated Output (Generated Output by PLN＋Purchased Output by PLN)

Source :PLN Statics, 2012

b) Electricity Sales Amount

Electricity sales amount, on the rise by an average 7.6% a year, reached 173,990.75GWh in 2012, up about 1.7

times over 100,097.47GWh registered in 2004. By consuming sector, the 2012 records show 41% went to

residential, 35% industrial, 18% business, 3% public, 2% government facilities, and 2% street lighting.

Compared with their 2004 figures, the residential sector marked the highest growth, up 2.9 percentage points,

followed by the commercial (business) sector, up 2.6 percentage points.

22

Fig,1-5 Indonesia’s Electricity Sales Amount by Sector

Source :PLN Statics, 2012

In Indonesia, most of electricity output is consumed in Java (particularly its western area where Jakarta is

located).

Tab.1-1 PLN’s Electricity Sales Amount (GWh)

Year

Area

2008

Up/

down

(%)

2009

Up/

down

(%)

2010

Up/

down

(%)

2011

Up/

down

(%)

2012

Up/

down

(%)

Java Bali 100,774 5.4 101,319 0.5 110,309 8.9 117,593 6.6 128,513 9.3

Non-Java Bali 28,244 0.9 33,263 17.7 36,988 11.2 40,399 9.2 45,478 12.6

Total 129,018 6.4 134,582 4.3 147,297 9.4 157,993 7.3 173,991 10.1

Source : PLN Annual Reports, each year’s edition

c) Electricity Outlook

PLN, in its Electricity Supply Service Plan (RUPTL, 2013 edition), forecasts that from 2013 through 2022

Indonesia’s electricity demand will grow from 189 TWh to 386 TWh, which means an annual growth of 8.4%.

By 2022 the number of customers is likely to jump from 54 million to 77 million contracts (up 2.7 million yearly).

As a result, the electrification rate is likely to perk up sharply from 79.6% to 97.7%. By area, electricity demand

in Java/Bali district is projected to grow from 144 TWh to 275 TWh, up 7.9% per annum. The district of East

Indonesia will register even a steeper growth of over 10% from 18 TWh to 46 TWh. The district of Sumatra is

expected to show a demand growth from 26 TWh to 66 TWh, up 10.6%/year.

In Java/Bali district, the industrial sector accounts for the largest share in total demand at 38.5%. In East

Indonesia and Sumatra, industrial sectors in these districts hold rather modest shares at 11% and 15.8%,

respectively. Also, in these districts, residential demand dominates the whole, taking as much as 62% and 55%,

each.

23

Thus, most of the electricity demand growth originates from Java where Jakarta, the country’s capital, is located.

And yet, Indonesia is an archipelago country consisting of more than 17,000 islands and, with scant progress

made in local electrification in not a few islands, as much as about 20% households out of the whole are forced to

live without electricity.

Fig,1-6 PLN’s Electricity Output Sold in 2012 by Area and Projections for 2022

Source :PLN RUPTL(2013)

(Note) Incremental electiricity demand from 2012 through 2022 is added up to 386 TWh on the assumption

that electricity demand would grow by an average 6.9%/year over the ten-year period.

d) Electricity Supply Plan

In order to satisfy electricity demand as much as required for supporting the Indonesian economic growth, the

country as a whole needs to install an additional generating capacity of 59.5 GW. It represents an average 6 GW

increase a year. In the RUPTL plan, PLN and IPPs are supposed to tap electricity supply of 16.9 GW (28%) and

25.5 GW (43%), each, while, currently, neither developers nor investors are decided for covering the remaining

17.1 GW (29%). In the RUPTL, the power plant system to realize for the electricity supply plan is designed as

follows;

Advanced coal-fired power generation: 37.9GW (63.8% of the whole)

Gas-turbine power generation: 5GW（8.4%）

Hydro power generation: 6.5GW（11.0%）

Geothermal power generation: 6.0GW（10.2%）

24

Fig,1-7 Electricity Supply Plan (for PLN & IPPs)

Source : PLN RUPTL(2013)

Next, according to the electricity demand outlook projected by the Ministry of Energy and Mineral Resources,

electricity needs over the 10 years from 2013 through 2022 will inflate by 7.4 GW/year on average and generating

capacity needs should exceed 100 GW by 2022. Also, focusing on the period from 2013 through 2031, the pace

of demand increase will average 12.4 GW/year, with generating capacity requirements amounting to 254 GW.

This surpasses Japan’s generating capacity in recent years. (According to the White Paper 2013, Japan’s

installed capacity totalled some 245 GW in 2011.)

Fig,1-8 Electricity Demand Outlook by Energy & Mineral Resources Ministry

Source : Materials of lectures by Ministry of Energy and Mineral Resources(September 2013)

Electricity demand (for increase) (GW)

installed capacity (GW)

generating capacity (GW)

maximum demand (GW)

electricity demand (TW)

25

e) Electricity Tariffs

In Indonesia electricity tariffs have been kept low conventionally thanks to subsidies. However, in order

to curb fiscal burdens stemming from the ballooning subsidies year after year, the parliament adopted

electricity tariff increases in January 2013. Pursuant to the adopted rule that electricity tariffs should be

raised by 3~4% every three months, and a total of 15% hike in electricity tariffs was made as of October

2013.

f) Industrial Electricity Tariff Increases/Automatic Tariff Adjustment System

The Ministry of Energy and Mineral Resources announced on January 21, 2014 that industrial electricity tariffs

(applicable to large business operators) would be raised from May 1 onward. It will be a 38.9% rise for the

contract capacity of over 200kVA (contract category I-3), with the tariff to be raised subsequently by 8.9% every

2~4 months. As for the contract of over 30,000 kVA (contract category I-4), a total of 64.7% rise is scheduled by

increasing the tariff by 13.3% every 2~4 months. As a result, incremental electricity tariffs paid by industrial

consumers are projected to reach a total of 8.85 trillion Rupiah.

Also, on the same day, or January 21, 2014, the parliament passed the government measure to introduce an

automatic electricity tariff adjustment system applicable to electricity consumers falling either one of the four

contract categories listed below.

Contract category R-3 (Residential of over 6600VA)

Contract category B-2 (Commercial of 6600VA~200kVA)

Contract category B-3 (Commercial of over 200kVA)

Contract category-1 (Government institutions of 6600VA~200kVA)

These four contract categories have received no subsidies since October 2013. Under the new system,

electricity tariffs for the four contract categories are planned to be linked to exchange rates, oil prices and inflation

rates. Though details of how to calculate individual tariffs need to be settled in the days to come, the shift to the

new system is expected to curb government spending by an estimated 142 billion Rupiah.

In addition, the Energy & Mineral Resources Ministry plans to expand the coverage of the automatic electricity

tariff adjustment system, under which electricity tariffs fluctuate based on economic indices and, from 2015

onward in the earliest case, electricity tariffs (applicable to a total of 17 categories), except those to residential and

commercial consumers whose electricity use is limited, are slated to be covered by the adjustable rating system.

g) Government Subsidies to PLN

Illustrated below are changes in government subsidies to PLN. The government subsidizes electricity tariffs

in order to make up for the deficits in generating cost, etc. that PLN is unable to cover with its tariff revenues, and

PLN receives the subsidy in a lump sum. Thus, electricity tariffs are kept cheap albeit soaring fuel costs, if any.

Meanwhile, the formula to calculate the government subsidies is provided in an ordinance issued by the Ministry

of Finance, whereby electricity selling prices and generating costs are compared by type of tariff and, when an

electricity selling price is found lower than cost, an amount of subsidy is calculated based on the gap.

26

Fig,1-9 Government Subsidies to Electricity Tariffs

4739 4097 3470

12511

3290936605

78577

5372058108

93178

103331

0

20000

40000

60000

80000

100000

120000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Source: PLN Annual Reports, each year’s edition

By the early 2000s, partly in reflection to phased electricity tariff increases, the government subsidies have

remained within the range of 3~4 trillion Rupiah. Afterward, due to soaring oil prices combined with curtailed

government subsidies for oil products, fuel costs jumped sharply, which consequently drove the government

subsidies up. The government subsidies, having dented briefly in 2009 thanks to falling fuel prices, advancing

fuel switching and so on, picked up again later and reached 103 trillion Rupiah in 2012.

Tab.1-2 PLN’s Average Unit Cost for Electricity Sold(Rp/KWh)

Year

Area 2008 2009 2010 2011 2012

Java Bali 634 661 697 709 732

Non-Java Bali 729 681 706 729 717

Total 655 666 699 715 728

(In yen) \5.27 \6.42 \6.50 \6.22 \6.50

※The values in terms of yen equivalent were calculated based on the yearend (last day of December, each year).


Tab.1-3 Generating Cost (2012, Rp/KWh)

Hydro Thermal Diesel Gas turbine Geothermal Combined Average

155.87 810.14 3,168.58 2,362,99 1,121.50 1,001.80 1,217.28


(Billion Rp）

27

h) State of PLN Management

Examinations of PLN’s management unveil that the company’s operating revenues increased by some 51%

between 2008 and 2012, whereby revenues have been up steadily year by year. And yet, due to skyrocketing

fuel prices and so on, the company’s management should have been red-ridden without the government subsidies.

Tab.1-4 Total electricity sales revenue of PLN（Billion Rp）

Year

Area

2008

Up/

down

(%)

2009

Up/

down

(%)

2010

Up/

down

(%)

2011

Up/

down

(%)

2012

Up/

down

(%)

Java Bali 63,884 9.2 66,960 4.8 76,875 14.8 83,411 8.5 94,098 12.8

Non-Java Bali 20,603 16.1 22,678 10.1 26,099 15.1 29,434 12.8 32,624 10.8

Total 84,487 10.8 89,638 6.1 102,974 14.9 112,845 9.6 126,722 12.3

(In yen) \680

billion

\863

billion

\958

billion

\982

billion

\1,131.8

billion

※In July 2010 electricity tariffs were raised by 15%

Source: PLN Annual Report, each year’s edition

3）Structure of Energy-related Industries

a) Outline of Electric Utility Industry

Under the present system of the electric utility industry, PLN and its subsidiaries as well as IPPs are responsible

for the power production sector, while PLN monopolizes the transmission/distribution sector. In the meantime,

PLN currently moves to encourage in-house company system and/or business-unit system, under which founded

were power-producing subsidiaries and general subsidiaries to be in charge of generation &

transmission/distribution in given areas (specified development areas like Batam, which hopes to be a second

Singapore), while individual departments are converted into business units (introduction of unit-specific

profitability-conscious operating system). Also, concerning electrification in rural areas, under the jurisdiction

of the “Office of the Minister for Cooperatives/Small-Medium Enterprises(SMOC & SMEs),” residents’

organizations called “Village Cooperatives (KUD)” are sporadic nationwide, which are in charge of electricity

supply in remote rural areas isolated from PLN’s power system.

Administrative organizations involved in the electricity sector include the National Energy Commitee (DEN)

responsible for energy development policy and general policy-making on energy use, the National Development

Planning Agency (BAPPENAS) in charge of national development policy and coordination, the Ministry of

Energy and Mineral Resources (MEMR) which supervises PLN and covers overall fields of resources and energy,

the Office of the Minister for State-run Enterprises which owns/manages PLN, the Ministry of Finance (MOF)

which is empowered to approve budgets, the National Energy Coordination Committee (BAKOREN) responsible

for energy policy-making and coordination, and the Indonesian Nuclear Power Agency (BATAN) engaged in

nuclear power generation-related research/development.

28

Fig,1-10 Electric Utility Industry’s System

(Note) Generated output by any power producers other than PLN is required to be wholesaled to PLN in

principle. But, under the former Electricity Act, from the aspect of stable electricity supply to industrial

complexes, four power producers, including PT Cikarang Listrindo and PT Krakatau Daya Listrik, are allowed, as

special cases, to supply electricity directly to the specified districts.

Source: Prepared based on “Energy/Electricity Situations in Major Asian Countries 2011” appearing on “Electric

Utility Industries Abroad,” First Edition’s Supplement No. 2, published by the Board of Overseas Electric Power

Research.)

b) The Ministry of Energy and Mineral Resources (MEMR)

The Ministry of Energy and Mineral Resources is the leading organization which assumes the reins of overall

energy-related matters and is empowered to regulate/supervise state-run enterprises involved in energy business.

Beside the development of the energy sector, the MEMR is responsible for data provision/analysis necessary for

National Energy

Council

(DEN)

Ministry of Energy &

Mineral Resources

（MEMR）

National Development

& Planning Agency

（BAPPENAS）

Office of Minister

for State-run

Enterprises

Ministry of

Finance

（MOF）

Nuclear Agency

（BATAN）

Nuclear Regulatory

Agency

(BAPETEN)

Office of Minister for

Cooperatives/Small & Medium

Enterprises

（SMOC & SMEs）

IPPs Local gov. In-house

generation

Consumers Consumers Consumers Consumers

PT. PLN

(Transmission/load

dispatching)

P3B Java Bali

P3B Sumatra

(Generation)

Indonesia Power

Java Bali Power

Generation

(Generation/transmis

sion to specified

districts)

PT PLN Batam

PT PLN Tarakan

・Generation

・Tnsmission/load

dispatching

・Customer service

Surplus power Power

wholesale

Power

wholesale

Support

サポート

Guidance

/coordination

Approval of

budgets

Possess & control Regulation/superv

ision

Development/others

policy-making &

coordination

Nuclear

research/development

Nuclear

regulatory service

Village

Cooperatives

（KUD）

29

conducting researches and studies on energy & mineral resources. In 2010, in its effort to encourage the

development and promotion of renewable energy, the MEMR newly set up the General Bureau of New &

Renewable Energy and Conservation (DGNREEC). The formation of the new General Bureau (into which

incorporated are the geothermal department, separated from the former General Bureau of Coal and Geothermal,

and the energy utilization department from the former General Bureau of Electricity and Energy Utilization)

proves effective in strengthening its regulatory and supervisory powers over renewable energy overall.

The General Bureau of Electricity (the former General Bureau of Electricity and Energy Use), one of the

general bureaus comprising of the MEMR, assumes regulatory and supervisory responsibilities over the electricity

sector, and fulfills such roles as the electricity sector-related policy-making, standards/procedures-setting,

coordination of criteria, and technical guidance/evaluation. The Bureau is also responsible for the preparation of

the Nation’s General Electricity Plan (RUKN) which contains a host of information including electricity

supply-demand outlook, grid network plan, investment/financing policy, and new/renewable energy utilization

policy.

Fig,1-11 Officials Posted to MEMR (2013)

Source: Published information of the MEMR

c) State-run Electric Utility (PLN)

In Indonesia electricity production is undertaken by PLN, a listed company of which shares are possessed 100%

by the national government, its subsidiaries and IPPs (independent power producers), while the

transmission/distribution sector is monopolized by PLN. In Java/Bali area where operation turns to be huge in

size, the power production sector has two subsidiaries specializing in power generation (Indonesia Power and Java

Bali Power Generation), while transmission and distribution services are managed by PLN’s in-house split units

(Java Bali Transmission & Load Dispatching Center (P3B Java Bali) and five distribution offices). Likewise, in

Sumatra, two power production business units (North Sumatra Power Generation BU, South Sumatra Power

Generation BU) and Sumatra Transmission & Load Dispatching Center (P3B Sumatra) and 7 local branch offices

are in operation. In other areas, business operations are under way in a vertically integrated style through local

branch offices. Among others, there are PLN’s subsidiaries engaged in electricity supply in specified areas,

typically PLN Batam (in operation in the bonded area of Batam) and PLN Tarakan (in service in Tarakan Island in

(The number of the staffs)

30

the province of East Kalimantan).

Tab.1-5 PLN’s Business Operation System

Java Bali Sumatra Others

Power production PLN’s power plants

Indonesia Power

Java Bali Power

Generation

IPPs

North Sumatra Power

Generation BU

South Sumatra Power

Generation BU

IPPs

9 local branch offices, and

PLN Batam

PLN Tarakan

Transmission/substations Java Bali

Transmission/Load

Dispatching Center

(P3B Java Bali)

Sumatra

Transmission/Load

Dispatching Center

(P3B Sumatra)

Load dispatching

Distribution/marketing 5 distribution offices 7 local branch offices

Source: Prepared based on reference materials from the Board of Overseas Power Research, among others.

Under the company’s president, PLN has 8 executive directors, out of which five assume the reins of

fuels/personnel general affairs, construction, materials, sales/risk management, and finance, while the remaining

three responsible for operations in the areas of Java/Bali, West Indonesia and East Indonesia, respectively. In

October 2011, when the Yudhoyono administration shuffled its cabinet, the former President Dahlan Iskan took

office as the Minister for State-run Enterprises and the post of PLN President was succeeded by the former

Director Nur Pamudji (responsible for primary energy).

As a result of the start of the new administration in October 2014, massive shuffling was done among the

Energy & Mineral Resources Ministry’s key officials, including the General Bureaus’ heads, and among PLN’s

leading officials, including the president. Actually, in December 2014 the government announced public

invitations to these posts.

d) IPPs (Independent Power Producers)

In Indonesia, in the second half of the 1980s it became hard for PLN to cope with sharply growing electricity

demand single-handedly, and introduction of private capital into electric utility business (IPP participation) began

in 1992 onward. Today, IPPs account for 22% of Indonesia’s installed capacity.

Fig,1-12 Shares in Installed Capacities by Producer Types

(Note) PPU:Private Power Utilities

Source: MEMR, Jaruman Director-General Presentation Materials 2013

Director of Finance

Head of Corporate Finance Division

Head of Budget Monitoring Planning Division

Head of Accounting Tax and Insurance Division

Resources and

General Affairs

Resources and

General Affairs

Resources and

General Affairs

Head of Corporate Legal

Internal Supervisory Unit

Corporate Secretary

Head of Corporate Delivery Unit

31

It is ruled that generated output by IPPs should be all purchased by PLN, and that private operators engaged in

IPP operations, when selling their generated output to PLN, are required in principle to do so through competitive

biddings. However, in such cases as ① renewables-based power production (micro hydro, geothermal, biomass,

wind, photovoltaic), ② surplus power, and ③ supplies to electricity-stricken areas, IPPs can directly be

nominated without bidding (Note).

In February 2014, when interviewed by media, Director Jarman for the General Bureau of Electricity expressed

that he hoped 50% of the power construction budget would be funded by private capital.

(Note) Among others, as special cases, rich-experienced IPPs, when installing an additional capacity within the

same site (to be a more-efficient and less-environmental-laden capacity if the new one is identical to conventional

unit in size), are allowed negotiated contracts without bidding.

4) Generating Facilities and Network Systems: Status-quo and Plans

a) Nation’s General Electricity Plan (RUKN) and Electricity Supply Service Plan (RUPTL)

Indonesia has two specific plans related to power development; the Nation’s General Electricity Plan (RUKN)

and the Electricity Supply Service Plan (RUPTL). RUKN represents the country’s energy-policy-based general

power development plan, while RUPTL is PLN’s plan for electric-utility operations to be prepared every year in

reflection to specific projects under way. Formally RUPTL is expected to be mapped out based on RUKN as

amended, though the real state of things seldom stands in that way. Now that RUKN, revised in 2008, needs to

be approved by the parliament as ruled by the Electricity Act as amended in 2009, the MEMR-sponsored

government plan proposed to the parliament has not been revised to date and left without fully considered.

Currently under preparation is a revised plan (2015-2040), which contains the concept of how to increase

electricity tariffs.The latest version of RUPTL, or RUPTL2013 (2013~2022), was published in December 2013 in

such form as reflecting RUKN 2008.

Tab.1-6 Features of RUKN and RUPTL

Nation’s General Electricity Plan

(RUKN)

Power Supply Service Plan (RUPTL)

Prepared by Energy & Mineral Resources Ministry

(MEMR)

State-owned electric utility (PLN)

Outline A 20-year general electricity plan

mapped out by the national government,

containing demand outlook, primary

energy, power development plan,

required funds, etc.

A 10-year power supply plan prepared by

PLN based on RUKN.

Renewal Revised every year (in principle) Revised every year (based on RUKN)

Source: Study Team (based on RUKN,RUPTL)

32

The development plan under RUPTL2012-2021 puts electric power demand in 2022 at 358,000GWh

(compared with 173,990GWh sold in 2012), with the growth rate projected to be 8.65% per annum on average.

Additional installed capacities in 2012~2021 are projected at some 57.3GW in Indonesia as a whole, which means

an addition of an average 5.7GW yearly.

Fig,1-13 Plan for Power Supply Capacity Expansion

Source: PLN president lecture material in September 2013

The chart below illustrates a projected energy mix of Indonesia’s power supply capacity for 2022, which shows

such compositions as coal (65.6%), natural gas with LNG included(16.6%), geothermal (11.0%), hydro (5.1%),

and oil & others (1.7%).

Fig,1-14 Power Supply Capacity by Fuel

Source: PLN president lecture material in September 2013

Plan for Power Supply Capacity Expansion

(2012年 – 2021年) ：

■Coal fired power generation:38 GW

■Geothermal power generation:6.3 GW

■Geothermal power generation:6.3 GW

■Gas fired power generation:4 GW

■Combined cycle:2.5 GW

■Others:0.28 GW

33

＜Reference：Recent Java/Bali Grid System’s Reserve Capacity＞

On May 7, 2013, the Java Bali grid system controlled by PLN recorded an all-time high maximum power (peak

power) of 21,968MW in net without in-house power included, and of 22,517MW in gross with in-house power

(2.5%) included. At present, the PLN-managed Java Bali grid system has an output capacity of 29,159MW (net),

which represents some 75% of peak power (net). That is, the system’s reserve capacity turns to be 25% or so in

numerical terms. However, given such factors as aging deteriorations, decreasing hydro output during dry

seasons, periodical inspections and accidental outages, electricity supply-demand conditions can be analyzed as

follows:

Tab.1-7 Recent Java/Bali Grid System’s Reserve Capacity

Item Capacity

・Output capacity (net) 29,159MW

・Output drown by aging

▲6,702MW ・Dry-season hydro down

・Inspections (thermal)

・Outage, etc.

The-day supply capacity available 22,457MW

Maximum power (net) 21,968MW

Reserve capacity while running 489MW

Source: TEPCO Design’s Jakarta Office

To sum up, the reserve capacity while running is found virtually absent, thus leaving the electricity

supply-demand balance in a very serious state. Meanwhile, PLN defines the case where the reserve capacity

while running (the-day supply capacity available – the-day demand) drops below the maximum single-unit

capacity (Sulalaya Plant’s 600MW) as the state of SIAGA (emergency). In the event the single-unit maximum

capacity falls down due to any accident on the plant side, PLN won’t be able to keep an electricity supply-demand

balance and, therefore, makes it a rule to take a prior-confirmed procedure to cut part of the grid system from the

network (forced outage).

b) Two Crash Programs

In an attempt to cope with sharply growing electricity demand and to slash its oil dependence, Indonesia is now

driving forward two development programs, named “Crash Programs,” both designed to accelerate power

resources development to fuel the power plants running on non-oil fuels.

34

Tab.1-8 Outline of Crash Programs

1st Crash Program 2nd Crash Program (Early stage)

Period 2006-2009 2010-2014

Developers PLN100% PLN 44%(422 万ｋW)

IPP 56%(531 万 kW)

Developed

capacities

Approx.10,000MW

Incl.: Java Bali 6,900MW

Others 3,100MW

Approx.10,000MW

Incl.: Java Bali 5,070MW

Others 4,452MW

Background

(purpose)

・ Emergency power development

(chiefly in Java Bali)

・Oil-free policy

・Emergency power development

・Power source diversification

・Renewables introduction

Power source Coal 100% ・Renewables 54%, incl.

Geothermal 41%, hydro 13%

・Fossil fuels 46%, incl.

Coal 36%, gas 1%, CC 9%

Legal grounds Presidential Decree(No.71/2006） Presidential Decree（No,4/2010）

Required funds Power sources: 8 billion US$ Power sources: 16 billion US$

Transmission capacity: 400 million US$

Source: Study Team (based on 1st Crash Program, 2nd Crash Program (Early stage))

①1st Crash Program

Because PLN attached the importance most to speediness in power plant construction and the state-of-art

technologies were not required as far as certain technology levels were satisfied, most projects under the First

Crash Program were awarded to the Chinese firms in accordance with the policy that any firms offering the floor

price in bidding should be the winner. However, due to difficulties in raising funds in China as a result of

financial crisis, and delays in construction by the Chinese contractors, among other things, only a unit, or the No.

1 unit (320,000 kW) of Labuan Power Plant was put on stream within 2009. Moreover, the power plants already

commissioned have suffered frequent accidental outages caused by malfunctioning facilities, and the rate of

attainment remained at 64.2% out of 6,377 MW at 2013 yearend. In the meantime, the MEMR explains that

3,550 MW, or the remaining 35.8% of the originally planned capacity development, is slated to be completed by

2014/2015.

②2nd Crash Program

In reflection to the intensifying issues of warming-gas emissions and coal-hauling infrastructure construction,

the Second Crash Program is characterized by stepped-up efforts for power source diversification, whereby the

importance is attached to the development of such renewables as geothermal (accounting for about 40% of the

program) and hydro, and IPP-based development is introduced as much as 55.7% of the whole.

Later, the Second Crash Program faced difficulties as well. For instance, many of its projects failed to gain

government endorsement, of which works simply delayed due to poor financing. Some of them were forced to

35

cancel their development for such reasons as a gas supply shortage and insufficient preparation for geothermal

development. As a result, though the Second Crash Program was reviewed twice in January 2012 and in August

2013, with planned developed capacity expanded to 17,018 MW, none of its projects has been completed by 2013

yearend.

c) Investment Needs

Investments required for the development of such infrastructure as power plants, substations and transmission

capacities amount to an estimated 125.2 billion US$, in which included are 71.1 billion US$ for PLN projects and

the remaining for IPP projects in the private sector. Annual investments in the years from 2013 through 2022 are

shown below.

Fig,1-15 Investments Required for Power Development

Source: RUPTL

So far, many PLN projects have been implemented with financing by foreign governments-credits (two-step

loans). But, since 2006, this type of credits have been shrinking and a growing amount of bonds (local & global)

have been issued. While PLN has financed its projects under the Crash Programs mainly by the

government-guaranteed credits, PLN, in recent days, has been raising funds from multilateral bonds, like World

Bank-backed pumped power construction and JICA-based Java – Sumatra interconnected transmission.

36

5) Trend about the Coal Resources

a) General Descriptions of Coal Resources in Indonesia

①Coal Distribution, Resources and Reserves

Fig,1-16 shows coal distribution in Indonesia. It is Sumatra and Kalimantan where are rich of coal in huge

quantities, while coal is available little in Sulawesi nor in most-populated Java.

Fig,1-16 Coal Distribution in Indonesia

Source: Study Team based on the document, the information that JCOAL provided

Indonesian efforts to prospect coal resources are still under way nationwide. That is, because new coal seams

are still discovered, the distribution map can be revised in the days to come. Tab.1-9 contains Indonesian coal

resources and reserves by area. Coal resources are defined as total quantities of coal available in a given area,

while coal reserves mean the quantities of coal recoverable feasibly in economic terms.

Indonesia’s coal resources amount to some 105.2 billion tons, and reserves 21.1 billion tons. By area, the

larger portion is held by Sumatra and Kalimantan.

Kalimantan

South Papua・Papua

Sumatra Sulawesi

■ bituminous-subbituminous coals

■ lignite

Java

37

Tab.1-9 Coal Resources and Reserves (Mt)

Source: Indonesia Coal Book 2012-2013

It has turned out that Java and Sulawesi alike are poor of coal, of which scarcity can be noted clearly from the

coal distribution illustrated in Fig,1-16. On the other hand, the scarcity of coal resources and reserves in Papua

areas is attributable mainly to scant progress made in prospecting efforts there. Depending on prospecting

developments ahead, the areas still have the possibility to prove availability of coals which feature high calorific

values. Fig,1-17 shows resources by area, and Fig,1-18 reserves by area.

38

Fig,1-17 Coal Resources by Area

0

20,000

40,000

60,000

80,000

100,000

120,000

スマトラ

ジャワ

カリマンタン

東インドネシア

計

（Mt)

確定資源量推定資源量予想資源量推定資源量計

スマトラ 7,699.18 10,634.37 13,995.92 20,153.72 52,483.19

ジャワ 2.09 0.00 6.65 5.47 14.21

カリマンタン 14,537.00 5,138.73 18,014.53 14,635.97 52,326.23

東インドネシア 53.09 33.09 181.90 95.72 363.80

計 22,291.36 15,806.19 32,199.00 34,890.88 105,187.43


Fig,1-18 Coal Reserves by Area

0

5,000

10,000

15,000

20,000

25,000

確定埋蔵量推定埋蔵量計

スマトラ

ジャワ

カリマンタン

東インドネシア

計

（Mt）


スマトラ 904.80 10,644.45 11,549.25

ジャワ 0.00 0.00 0.00

カリマンタン 4,624.57 4,957.90 9,582.47

東インドネシア 0.06 0.06 0.12

計 5,529.43 15,602.41 21,131.84


（Mt）

（Mt）

■ ①Sumatra

■ ②JAWA

■ ③Kalimantan

■ ④East

Indonesia

■ ⑤Total

■ ①Sumatra

■ ②JAWA

■ ③Kalimantan

■ ④East

Indonesia

■ ⑤Total

①Sumatra

②JAWA

③Kalimantan

④East Indonesia

⑤Total

Measured Resources Indicated Resources Inferred Reserve Hypothetic Reserve

Measured

Resources

Indicated

Resources

Inferred

Resources

Hypothetic

Resources

Total

Proved Reserve Probable Reserve Total

Proved Reserve Probable Reserve Total

①Sumatra

②JAWA

③Kalimantan

④East Indonesia

⑤Total

39

②Special Features of Indonesian Coals in Qualitative Terms

Reportedly Indonesian coals are characterized by the high shares held by bituminous-subbituminous coals and

lignite. Yet, though in very limited quantities, anthracite is also produced and, in the central part of Kalimantan,

availability of high-rank coking coals is proven.Tab.1-10 shows coal resources and reserves by calorific value.

In regard to resources and reserves alike, over 80% proves to be coals having a calorific value of under 6,100

kcal/kg. Particularly more than 41% of reserves is found to be coals under 5,100 kcal/kg in calorific value.

Coal resources and reserves by rank are illustrated in Fig,1-19 and Fig,1-20, respectively. It is noted high-rank

coals (High: 6,100-7,100) and ultra-high-rank coals (Very High: >7,100) are limited, but coal resources with a

calorific value of over 7,100 kcal/kg are put at a billion tons.

Tab.1-10 Coal Resources and Reserves by Rank (Mt)

計 % 確定埋蔵量推定埋蔵量計 (%)

Low(<5100) 21,227.63 20.08 7,603.88 1,105.40 8,709.28 41.21

Medium(5100 -6100 ) 69,726.02 66.29 7,063.52 2,904.41 9,967.93 47.17

High(6100-7100) 13,220.61 12.57 861.73 1,410.44 2,272.17 10.75

Very High(>7100) 1,013.19 0.96 73.29 109.18 182.47 0.87

計 105,187.44 100.00 15,602.41 5,529.43 21,131.85 100.00

資源量埋蔵量品質(kcal/kg)


Fig,1-19 Coal Resources by Rank

20.18%

66.29%

12.57%0.96%

Low(<5100)

Medium(5100 -6100 )

High(6100-7100)

Very High(>7100)


Reserve quality Resources

Total Proved Reserve Probable Reserve Total

40

Fig,1-20 Coal Reserves by Rank

0

2,000

4,000

6,000

8,000

10,000

12,000


Low(<5100)

Medium(5100 -6100 )

High(6100-7100)

Very High(>7100)


Next, examining coal resources by rank and area, Kalimantan reportedly contains high-rank coals of about 11.8

billion tons and ultra-high-rank coals of 940 million tons. Though not illustrated here, Papua is expected to have

high-rank coals of 9 million tons and ultra-high-rank coals of 300 million tons lying underground within the area..

Fig,1-21 Coal Resources by Rank and Area

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Low(<5100 kal/gr)

Medium(5100 -6100 kal/gr)

High(6100-7100)

Very High(>7100)

（Mt）

発熱量スマト

ラジャワ

カリマンタン

スラウエシ

パプア計

Low(<5100 kal/gr) 18,990 0.9 2,220 0.2 21,000

Medium(5100 -6100 kal/gr) 32,040 10 37,360 220 90 70,000

High(6100-7100) 1,040 2 11,790 10 9 13,000

Very High(>7100) 940 30 1,000

計 52,070 12.9 52,310 230.2 129 105,000


（Mt）

（Mt）

Proved Reserve Probable Reserve

Total

Total

Sumatra JAWA Kali

-mantan Sulawesi Papua Total

Sumatra JAWA Sulawesi Papua Total Kali

-mantan

41

The large part of Indonesian coal reserves are the coals of low calorific values. As aforementioned, coals

under 5,100 kcal/kg account for 41% of coal reserves. No formal standards are available for defining low-rank

coals. Accordingly, with the low-rank coals tentatively defined here as those of which calorific value is around

5,100 kcal/kg or less than that, their distribution is summarized. These coals can be counted as categorized into

subbituminous coals and/or lignite. Low-rank coals are found abundant in Kalimantan, South Sumatra, Jambi

and Riau. In recent years, the Indonesian government has been promoting the positive use of low-rank coals with

which the country is blessed. The government’s move is also reflected on this project, coal-fired power plant

construction, which will be discussed later.

b) Relevant Moves to Mining Act in Indonesia

①Mining Rights

It is a mining right to be important in discussing the trend of the coal mine. The mining rights, controlled by

the national and/or municipal governments, enable the governments to bind the operation of mines by law and

force them to pay taxes. This is not a special feature specific to Indonesia but it is common worldwide.

As in any other countries, there are two kinds of mining rights in Indonesia; prospecting rights and mining

rights. While these two kinds of rights are also applied to any minerals other than coals, their explanations are

made here by narrowing the target to coals alone.

The right of prospecting is the right to prove resources and reserves through prospecting efforts with such

techniques as boring. As a result of prospecting, potential concessions attract firms to be engaged in coal mining

and marketing. The right of mining and marketing coals is called the right of mining. These two kinds of

rights are issued by the national and/or local governments.

Currently existing rights can be grouped into two types. One is the so-called CCoW (Coal Contract of Work)

issued by the national government and concluded between the national government and major coal mines. The

other is the so-called IUP issued by local governments to coal companies. Of these, the former was abolished

under the newly-enacted Mining Act (2009 Presidential Decree No.4; UUNo4/2009 Tentang Pertambangan

Mineral dan Batubara). Existing CCoW, therefore, will be registered in the capacity of IUP, if any renewed

ahead.

IUP is further grouped into a few types. They include Mining Business Permits (IUP：Izin Usaha

Pertambangan), Civil Mining Permits(IPR:Izin Pertambangan Rakyat), and Special Mining Business Permits (Izin

Usaha Pertambangan Khusus), but explanations of their details are omitted here.

CCoW has been eligible to hefty privileges so far, but, under the new Mining Act, the privileges set to diminish

gradually. In specific terms, because an application made from now on is nothing but an application for IUP, its

concession area will be narrower and its duration before renewed will be shorter, among other things. On the

other hand, the rate of the mine products tax (imposed in proportion to mining output) will be cut from 13.5%

currently applicable to CCoW to 3～7% now imposed on IUP.Generally speaking, the national government, so far

42

having given big privileges to a limited number of mines in return for heavy taxing on them, now aims at more

prudent control by reviewing its big powers and assigning the privileges to local governments.

②Major Points of the New Mining Act

From now on, major contents of the new Mining Act are stated by item.

ⅰ. Domestic Market Obligation

Under the act, enforced for the security of domestic coal demand, the mines are allowed coal exports only when

domestic demand is satisfied. Hence, the Indonesian government needs to determine the size of domestic coal

demand and, also, set the minimum ratio (%) of domestic coal marketing (supply) to coal output at the mines.

As a matter of natural course, some of the mines are producing coals of which qualities are suitable for the

domestic market, while others mining those which are more fitting to exports. For this reason, in order to fulfill

the domestic market obligation, the mines are allowed Quarter Transfers among them.

The amount of domestic market obligation is set in June every year in reference to the three indices below:

・Coal demand projected by domestic producers and consumers for the next year

・Coal production planned by coal companies for the next year

・Energy & Mineral Resources Minister’s rules on domestic coal demand and the minimum ratio of domestic

coal marketing

In relation to the above, with a watch-dog schedule installed, the firms failing to meet or observe their domestic

market obligation are imposed penalties.

As shown inTab.1-11, domestic supply amounted to 67.25 million tons in 2012 and increased to 74.32 million

tons in 2013. Of the supply in 2012, coal-fired power plants received 54.69 million tons, accounting for the

largest portion of 81%, followed by cement, textile and fertilizer which, when combined, received 12.23 million

tons or 18.1%, and foundry/metallurgy around 330,000 tons or 0.49%. Among the coal-fired power plants, the

largest is PLN (55.29%). IPP also claims a slice as big as 23.72%. Among others, cement accounts for 12.49%,

followed by textile/textile manufacturing at 2.87%.

The compositions changed little in 2013, topped by coal-fired power plants with 60.49 million tons or 81%,

followed by cement and textile/fertilizer with 13.09 million tons or 17.61%, and foundry/metallurgy 740,000 tons

or 1%. Among the coal-fired power plants, PLN remains as the largest at 49.29 million tons, which holds

66.32% of the whole.

In 2013 coal output is projected at 366.04 million tons and the minimum domestic coal marketing ratio is set at

20.30%. The minimum domestic coal marketing ratio has been set at 25% so far. But, because output grew

more than planned, and because domestic consumption did not grow so much as projected, the ratio of domestic

supplies to total coal output has been on the decline.

43

Tab.1-11 Domestic Supply Outlets under Domestic Market Obligation in 2012 & 2013

37.18 55.29 4.000-5.200 49.29 66.32 4.000-5.200

15.95 23.72 4.000-5.200 9.82 13.21 4.000-5.200

3.PT.FREEPORT INDONESIA（民間会社、銅山） 0.83 1.23 5.800 0.83 1.12 5.800

4.PT.NEWMONT NUSA TENGGARA（民間会社、銅山） 0.54 0.80 5.000 0.55 0.74 5.000

5.PT.PUSAKA JAYA PALU POWER（民間会社） 0.19 0.28 5.000

54.69 81.32 60.49 81.39

B.

1.PT.INCO（民間会社） 0.14 0.21 5.900 0.20 0.27 5.900

2.PT.ANTAM.Tbk（鉱物資源公社） 0.19 0.28 6.600 0.19 0.26 6.600

2.PT.Krakatau Steel（製鉄公社） 0.35 0.47 4.500-5.000

0.33 0.49 0.74 1.00

1.セメント会社 8.40 12.49 4.100-6.300 9.80 13.19 4.200-6.300

2.繊維、繊維製造会社 1.93 2.87 5.000-6.500 1.93 2.59 5.000-6.500

3.肥料会社 1.30 1.93 4.200-5.400 0.76 1.02 4.200

4.パルプ会社 0.60 0.89 4.500-5.500 0.60 0.81 4.500-5.500

12.23 18.18 13.09 17.61

67.25 100.0 74.32 100.0

鋳物・冶金

供給先

2012年 2013年

使用量（百万トン）

%発熱量GCV

（kg/kcal)使用量

（百万トン）%

発熱量GCV

（kg/kcal)

A.

石炭火力発電所（PLTU）

1.PT.PLN （電力公社）

2.IPP（民間発電）

小計

予定出炭量（DMO割合） 3億2,853万トン（20.4%） 3億6,604万トン（20.3%）

小計

C

セメント・肥料・繊維

小計

計


Next, shown in Tab.1-12 are the quotas to individual mines in 2012 and 2013. The data are on CCoW mines,

state-run mines (PTBA) and IUP mines. Focusing on 2013, the largest is KPC Mine (No. 25 in the table below)

at 10.76 million tons, or 14.5% of the whole, followed by Adaro Mine at 10.15 million tons, or 3.7% of the whole.

Among others, the mines of which quotas are over a million tons include Arutomin Mine, Berau Coal Mine,

Indominco Mandiri Mine, Insani Baraperkasa Mine, Kideco Jaya Agung Mine, Mahakam Sumber Jaya Mine,

Trubaindo Coal Mining Mine, and state-run Bukit Asam. They are all CCoW mines. On the other hand, none

of IUP mines are allotted over-a-million-ton quotas.

cement and textile/fertilizer

foundry/metallurgy

coal-fired power plants

Gross Calorific Value

(kg/kcal)

Gross Calorific Value

(kg/kcal)

Demand (million tons)

Demand (million tons)

cement

textile

fertilizer

sub total

sub total

sub total

total

domestic supply (Share of DMO) 328.53 (20.4%) 366.04 (20.3%)

pulp

44

Tab.1-12 Quotas by Mine under Domestic Market Obligation in 2012 & 2013

炭量％％

1. PT Adaro Indonesia 9,826,328 14.6% 13.7%

2. PT Antang Gunug Meratus 614,146 0.9% 1.2%

3. PT Artmin Indonesia 5,695,824 8.5% 9.0%

4. PT Asmin Koalindo Tuhup 726,739 1.1% 1.2%

5. PT Astaka Dodol 0 0.0% 0.1%

6. PT Bahari Cakrawala Sebuku 71,650 0.1% 0%

7. PT Bangun Banua Persada Kalimantan 204,715 0.3% 0.3%

8. PD Baramarta 767,682 1.1% 1.2%

9. PT Barasentosa 0 0.0% 0.5%

10. PT Berau Coal 4,517,450 6.7% 6.6%

11. PT Borneo indonesia 767,682 1.1% 0.5%

12. PT Baturona Adimulva 245,658 0.4% 0.7%

13. PT Batualam Selaras 12,283 0.0% 0.0%

14. PT Bharinto Ekatama 0 0.0% 0.5%

15. PT Dharma Puspita Mining 0 0.0% 0.1%

16. PT Firman Ketaun Perkasa 511,788 0.8% 0.7%

17. PT Gunung Bayan Pratamacoal 899,619 1.3% 0.9%

18. PT Indominco 2,988,841 4.4% 0.0%

19. PT Indexim Coalindo 92,122 0.1% 0.6%

20. PT Indominco Mandiri 0 0.0% 3.6%

21. PT Insani Baraperkasa 1,001,329 1.5% 1.7%

22. PT Jorong Barutama Greston 229,383 0.3% 0.3%

23. PT Kadya Caraka Mulya 71,650 0.1% 0.1%

24. PT Kalimantan Energi Lestari 111,570 0.2% 0.7%

25. PT Kaltim Prima Coal 9,274,007 13.8% 14.5%

26. PT Kideco Jaya Agung 6,960,316 10.3% 8.8%

27. PT Kartika Selabumi Mining 46,768 0.1% 0.2%

28. PT Lanna Harita Indonesia 614,146 0.9% 0.8%

29. PT Mahakam Sumber Jaya 1,740,079 2.6% 2.5%

30. PT Mandiri Inti Perkasa 675,609 1.0% 1.0%

31. PT Multi Harapan Utama 473,916 0.7% 1.3%

32. PT Multi Tambang Jaya Utama 106,313 0.2% 0.3%

33. PT Marunda Graha Mineral 242,149 0.4% 0.5%

34. PT Nusantara Thermal Coal 204,715 0.3% 0.3%

35. PT Perkasa Inakakerta 552,731 0.8% 1.1%

36. PT Pesona Khatulistiwa Nusantara 427,445 0.6% 1.2%

37. PT Pendopo Energi Batubara 0 0.0% 0.0%

38. PT Riau Bara Harum 307,073 0.5% 0.3%

39. PT Santan Batubara 552,731 0.8% 0.9%

40. PT Singlurus Pratama 516,957 0.8% 0.9%

41. PT Sumber Kurnia Buana 123,853 0.2% 0.2%

42. 685,796 1.0% 0.8%

43. PT Tanjung Alam Jaya 138,183 0.2% 0.1%

44. 0 0.0% 0.3%

45. PT Tubaindo Coal Mining 1,576,307 2.3% 1.6%

46. 200,130 0.3% 0.2%

47. PT Wahana Baratama Mining 921,218 1.4% 1.1%

55,696,899 82.8% 83.1%

103,208

825,633

258,020

1,224,906

PT Teguh Sinar Abadi 129,010

小計 61,764,047

PT Tanito Harum 619,247

963,274

206,416

344,026

259,740

782,832

860,066

20,642

258,020

688,053

688,053

148,365

PT Tambang Damai

774,059

430,033

2,677,901

1,255,696

240,818

59,861

516,039

10,760,942

6,536,499

154,812

602,046

1,892,145

20,642

349,531

61,925

516,039

695,824

860,065

344,026

4,902,374

344,026

516,039

A コントラクター（CCoW)

0

2012年 2013年

炭量

10,151,832

860,065

6,700,209

860,065

94,607

0

206,416

<CCoW> Quotas Quotas

sub total

45

炭量％％

PT Bukit Asam (Persero) Tbk. 2,661,297 4.0% 3.0%

炭量％％

1. PT Admitra Baratama Nusantara 777,918 1.2% 0.9%

2. PT Arzara Baraindo 213,927 0.3% 0.3%

3. PT Bara Harmonis Batang Asam 0 0.0% 0.3%

4. PT Bara Kumala 0 0.0% 0.6%

5. PT Batu Gunung Mulia 291,719 0.4% 0.3%

6. PT Berau Bara Energi 194,479 0.3% 0.2%

7. PT Bhumi Rantau 291,719 0.4% 0.3%

8. PT Bukit Baiduri Energi 470,845 0.7% 0.8%

9. PT Binamitra Sumberta 194,479 0.3% 0.2%

10. PT Cahaya Energi Mandiri 194,479 0.3% 0.2%

11. KUD Gaiah Mada 0 0.0% 0.4%

12. PT Jembavan Muarabara 991,845 1.5% 1.2%

13. PT Kemilau Rindang Abadi 816,814 1.2% 1.0%

14. PT Karya Utama Banua 291,719 0.4% 0.3%

15. PT Kayan Putra Utama Coal 583,438 0.9% 0.7%

16. PT Kitadin 0 0.0% 0.4%

17. PT Lamindo Inter Multikon 952,949 1.4% 1.1%

18. PT Lembuswana 388,959 0.6% 0.5%

19. PT Mega Prima Persada 350,063 0.5% 0.4%

20. PT Mitra Jaya Abadi Bersama 0 0.0% 0.3%

21. PT Multi Sarana Avindo 680,678 1.0% 0.8%

22. PT Pipit Mutiara Java 388,959 0.6% 0.5%

23. PT Seeongga Sumber Lestar 291,719 0.4% 0.3%

24. PT Sinar Kumala Naga 233,375 0.3% 0.3%

25. PT Tunas Muda Jaya 291,719 0.4% 0.3%

26. PT Surya Sakti Darma Kencana 0 0.0% 0.4%

27. PT Telen Orbit Prima 0 0.0% 0.3%

28. PT Transisi Energi Satunama 0 0.0% 0.4%

8,891,802 13.2% 13.9%

67,250,000 100.0% 100.0%

C. IUP（鉱業許可）炭鉱

国営炭鉱B.

2012年

2012年 2013年

炭量

2,236,171

172,013

688,053

189,214

195,910

448,449

258,020

172,013

258,020

599,036

172,013

2013年炭量

344,026

299,756

877,267

722,455

258,020

516,039

295,002

842,864

344,026

309,624

217,098

602,046

小計 10,319,752

総計 74,320,000

258,020

206,416

258,020

279,434

225,418

311,480


As a direction ahead rising DMO (Domestic Market Obligation) is likely. Given vigorous foreign investments

in Indonesia, construction of electricity-consuming facilities, notably manufacturing plants, is under way here and

there. As a result, the country is chronically short of electricity and, therefore, to strengthen DMO-related

measures, designed to solve the power shortage, still remains as a national priority in the days to come. Also,

from the perspectives of resource nationalism, to promote the domestic use of mineral products is popularly

supported by the Indonesian citizens, which can be cited as another factor to boost DMO rises.

ⅱ. Coal Price-setting by the National Government (HBA & HPB)

The new Mining Act 2009 puts the coal selling price under a government control mechanism. Under the Act,

benchmark selling prices, set by coal rank (by brand) every month, are open to the public. Based on the prices

Quotas

Quotas

Quotas

Quotas

<PTBA>

<IUP>

sub total

total

46

the government imposes mineral products taxes on individual mines. The benchmark selling prices are

calculated based on the four indices below:

・Indonesian Coal Index

・Platts

・Newcastle Export Index

・Newcastle Global Coal Index

The benchmark selling price for coal is popularly known as HBA (which stands for Hrga Batubara Acuan in

Indonesian language), which is set in reference to 8 coal brands. Then, taking the 8 brands as the standards, the

price for 60 brands is set, which is called HPB (Harga Potokan Batubara) and posted monthly together with HPB.

The prices are in US$ and in FOB/Vessel terms. In other words, they are the prices after loaded onto vessels

offshore Indonesia, not representing the prices at mines.

47

Tab.1-13 shows HBA and HPB prices in September 2014. It is noted from the table that the prices are set

based on calorific value (kcal/kg), total moisture (TM%), total sulfur (TS%) and ash content (Ash%). 1～8 in

the table are major 8 brands (HBA). The highest-priced coal is Gunung BayanⅠ, a brand from Gunung Bayan

Pratama Coal Mine, which features a calorific value of 7,000 kcal/kg and traded for 74.69US＄/t. On the other

hand, the cheapest-priced is a brand called LIM3000 with a calorific value of 2,995 kcal/kg and traded for

17.22US＄/t. What’s noteworthy in recent years is that there have been apparent moves to tag even such

low-calorie coals as under 3,000 kcal/kg, like LIM3000, previously not subject to pricing and barely traded for a

higher price than “mining cost + a 25 margin.”

48

Tab.1-13 HBA & HPB in September 2014

HARGA BATUBARA ACUAN (HBA) &HARGA PATOKAN BATUBARA (HPB)

BULAN SEPTEMBER 2014

HBA

HBA (US$/Ton)

69.69 FOB Vessel Kualitas:

CV = 6322 kcal/kg GAR; TM = 8 %;TS =

0.8 % ar; Ash = 15% ar

HPB BATUBARA MARKER

NO MEREK DAGANG/BRAND

KUALITAS TYPICAL HPB

MARKER

(US$/ton) CV

(kcal/kgGAR)

TM

(%)

TS

(%, r)

Ash

(%,ar)

1 Gunung Bayan I 7,000 10.00 1.00 15.00 74.69

2 Prima Coal 6,700 12.00 0.60 5.00 75.45

3 Pinang 6150 6,200 14.50 0.60 5.50 68.12

4 Indominco IM_East 5,700 17.50 1.63 4.80 57.11

5 Melawan Coal 5,400 22.50 0.40 5.00 55.74

6 Envirocoal 5,000 26.00 0.10 1.20 52.65

7 Jorong J-1 4,400 32.00 0.25 4.15 42.39

8 Ecocoal 4,200 35.00 0.18 3.90 38.82

CONTOH HPB BATUBARA LAINNYA YANG TERDAFTAR DI DITJEN MINERBA



MARKER

(US$/ton) CV

(kcal/kgGAR)

TM

(%)

TS

(%, r)

Ash

(%,ar)

9 Gunung Bayan II 7,000 12.00 2.00 10.00 71.01

10 Marunda Thermal Coal 6,600 11.00 0.50 10.00 73.58

11 Trubaindo HCV_HS 6,553 12.00 1.69 4.21 69.85

12 Medco Bara 6500 6,500 10.00 3.28 9.38 62.42

13 Trubaindo HCV_LS 6,423 11.50 0.71 4.76 72.57

14 AGM Waruba Coal 5,313 23.00 0.24 4.00 55.66

15 Pinang 6000 NAR 6,300 14.00 0.60 5.50 69.52

16 ArutminSatui 10 6,300 11.00 1.00 10.00 68.38

17 ArutminSenakin 6,250 11.00 1.00 12.00 67.05

18 Arutmin A6250 6,250 10.00 1.20 12.00 67.00

19 Mandiri A 6,210 10.00 0.70 4.65 71.51

20 Wahana Coal 6,200 12.00 0.90 10.00 66.97

21 Medco Bara 6200 6,200 10.00 4.00 12.00 55.26

22 IndomincoIM_West / 6500 6,171 15.50 0.76 5.22 66.55

49



MARKER

(US$/ton) CV

(kcal/kgGAR)

TM

(%)

TS

(%, r)

Ash

(%,ar)

23 TAJ Coal 6,200 10.00 1.00 14.00 66.46

24 Mandiri B 6,148 10.00 1.26 4.70 68.58

25 Trubaindo MCV_LS 6,143 14.00 0.76 5.20 67.38

26 SKB Coal 6,130 9.00 2.20 17.00 60.44

27 Baramarta Coal 6,112 9.50 0.95 13.00 66.48

28 Arutmin A6100 6,100 11.50 1.00 12.50 64.88

29 Insani Coal 6,050 19.00 0.15 3.20 66.06

30 BCS Coal 5,915 15.10 0.56 9.40 63.37

31 IndomincoIM_West / 6350 6,029 15.50 0.71 5.22 65.31

32 Bangun Coal 6,072 10.02 2.20 14.91 59.90

33 Pinang 6000 6,000 16.00 0.60 5.00 65.19

34 Indominco IMM_MCVHS 5,970 15.50 1.65 5.05 61.02

35 Multi Coal Low 5,950 16.00 1.00 7.00 62.29

36 Multi Coal Middle 5,900 16.00 2.00 7.00 57.78

37 Pinang 5900 5,900 19.00 0.90 4.50 61.06

38 Arutmin A5900 5,900 12.00 0.90 13.00 62.61

39 Multi Coal High 5,765 16.00 3.20 7.00 51.62

40 KCM Coal 5,730 10.50 0.90 20.50 58.85

41 TSA Coal 5,700 18.00 2.00 8.00 54.00

42 Tanito Coal 5,700 17.50 1.00 8.50 58.15

43 Mahakam Coal 5,700 17.50 1.00 8.50 58.15

44 Ebony High Sulphur 5,700 18.00 1.75 4.70 56.32

45 Pinang 5700 5,700 19.00 0.50 5.00 60.52

46 IBP 5500 5,500 20.00 1.00 7.00 55.12

47 Arutmin A5700 5,700 11.00 0.80 14.00 61.18

48 BSS Coal 5,520 10.00 0.45 15.50 60.73

49 LannaHarita Coal 5,500 22.00 1.00 6.00 54.20

50 Pinang 5500 5,500 21.00 0.40 5.50 57.46

51 Mahoni Medium Sulphur 5,500 20.00 1.30 4.70 54.84

52 Mahoni 5,500 20.00 0.80 4.70 56.84

53 Mahakam Coal B 5,400 23.00 1.50 8.00 49.82

54 Mahoni B 5,300 22.50 0.80 4.60 53.38

55 Kideco Coal 5,125 24.50 0.10 2.00 54.36

56 Agathis 5,100 25.00 0.82 4.50 49.95

57 LannaHarita Coal 5,000 27.00 1.20 6.00 45.73

58 IBP 5000 5,000 25.00 1.00 7.00 47.33

59 Sungkai Medium Sulphur 5,000 26.00 1.30 4.50 46.53

60 Sungkai 5,000 26.00 0.90 4.50 48.13

61 Sungkai High Sulphur 5,000 26.00 1.70 4.50 44.93

62 Arutmin A5000 5,000 22.40 0.54 8.90 49.97

50



MARKER

(US$/ton) CV

(kcal/kgGAR)

TM

(%)

TS

(%, r)

Ash

(%,ar)

63 AGM Warute Coal 4,350 33.00 0.40 4.00 40.92

64 IBP 4600 4,600 28.00 0.50 7.00 44.08

65 Bas Gumay Coal 4,400 35.00 0.50 4.96 39.48

66 IBP 4400 4,400 30.00 0.50 7.00 41.30

67 IBP 4200 4,200 32.00 0.50 6.00 38.26

68 PIC Coal 4,200 33.00 1.75 6.00 32.74

69 Borneo BIB 3,800 41.00 0.40 5.00 26.05

70 AGM Warutas Coal 3,800 40.00 0.15 5.23 26.52

71 PKN 3500 3,520 43.40 0.15 3.40 23.10

72 LIM 3010 3,010 47.50 0.60 5.30 18.25

73 LIM 3000 2,995 50.10 0.60 5.30 17.22

FORMULA HARGA PATOKAN BATUBARA STEAM (THERMAL)


51

Fig,1-22 illustrates changing prices for HBA 8 brands in the last 4 years. It is noted that the price, peaking at

early 2011, has been on the decline to date and now stands at around 60% of the peak.

Fig,1-22 HBA Price Changes (2009 ~ 2014)

Source: Study Team on the basis of the data that was excerpted from the HP of MEMR

ⅲ. Export Restrictions

Surfacing now are moves to restrict mineral resource exports. Namely, in an attempt to urge producers of

mineral resources to put added values on their products, there are the moves to ban exports of minerals in

unprocessed/unfinished-product forms and/or to impose export duties on specified minerals. However, as far as

coals are concerned, DMO and the benchmark coal prices are counted as part of export restrictions in narrow

terms and, unlike other minerals, coals have been not imposed to date any specific regulations to enforce the

added-value requirement. Coals are not subject to export duties either.

52

＜Export Bans on Unprocessed Minerals＞

The Indonesian government, having prepared legal arrangements for making added values on mineral resources

mandatory, promulgated a statute, or a 2012 Energy & Mineral Resources Ministerial Decree No.7 dated February

6, 2012, which required added values to be put on mineral resources. The decree stipulates detailed provisions

of what were stated in the new Mining Act (2009 Presidential Decree No.4) enacted on January 14, 2009 and the

“Detailed Rules on Business Activities of the Mining and Coal Industries (February 1, 2010: 2010 Ministerial

Rules No. 22),” the latter containing detailed rules for enforcing the former. For example, the decree states that

mineral resource producers, to whom processing becomes mandatory in order to increase added values of minerals,

won’t be able to export raw mineral resources from January 2014 and on. However, coals are not among the

minerals specified for the export bans. The mineral resources to which the decree is applicable are metallic

minerals, non-metallic minerals and ores.

＜Export Duties on Coals＞

Coal export duties, though under consideration in the past, were not realized due to objections raised by mines

and their related organizations. The failed effort was introduced in October 2005 by the-then Finance Minister

Anwar by issuing 2005 Financial Rules No.95. The Indonesian Association of Coal Producers, among others

presented the case to the court and, ultimately, given a judgment by the Supreme Court, the coal export duties

were formally abolished on June 13, 2006.Since then, in regard to imposition of coal export duties, the Indonesian

government has not mapped out any clear-cut policy. It is attributable mainly to two factors below:

・ Because the royalty on coal, set at 13.5%, is higher than other mineral resources, many coal companies

have a recognition that they have already been heavily taxed.

・ The contract of CCoW mines contains a provision that, after concluded, their contract won’t be

influenced by any new taxation subsequently introduced. As a result, only IUP mines would be subject to

new taxation, if introduced under current system, thus producing a sense of inequality among coal

producers. Also, if the government dared to impose export duties on CCoW mines too, fierce resistance

from CCoW companies should be unavoidable and the international confidence should be lost either.

Besides, it is pointed out, from the aspect of international competitiveness of coal exports, that export duties

contain serious negative factors. Coal-exporting countries like Australia are expected to continue the promotion of

their cross-border shipments, and growing coal exports from the U.S., Canada and Columbia are likely too.

Accordingly, if the Indonesian government introduced the export duties and the mines, as part of their cost, put

them on their export prices, international competitiveness of the Indonesian coals should be undermined much.

Then, dire outcomes, typically mine closures and job losses, could easily be imagined. Thus, the Indonesian

government has no choice but to be cautious toward the export duties.

ⅳ. Revised Foreign Investment Ratios on Mines

Foreign firms to develop CCoW mines are required, under an Indonesian statue, to transfer 10 years after the

mine was developed 51% of the mining company’s shares to their Indonesian partners. Some of the CCoW

mines subject to the provision, such as Adaro Mine, KPC Mine, Arutomin Mine and Kideco Jaya Agung Mine,

have already completed their stock assignments to domestic firms.

53

Under the new Mining Act, foreign firms whose mines start production under the newly-enacted mining act are

required to transfer to Indonesian domestic firms 20% of their companies’ shares six years after the

commencement of their commercial production, with the ratios to be raised to 30% in the 7th year, 37% in the 8th

year, 44% in the 9th year and 51% in the 10th year. The priority parties to which capital is to be transferred are

the national government, local governments, state-run corporations, local governments’ related corporations and

general domestic firms in this order.

ⅴ. A Law on Low-rank Coal Users Incentives Incl. Coal-fired Power Plant at Mines

In its efforts to prompt the use of domestically produced low-rank coals, and on the belief that coal-fired power

plants, if built at mines, could increase added values of coals, the Indonesian government enacted a law on

incentive coal supplies in such cases. According to it, under the 2011 Statute No. 1348 promulgated by the

General Bureau of Minerals and Coals, with a calorific value of 3,000 kcal/kg drawn as the boundary, coal prices

at mines are decided as described below:

・Coals over 3,000 kcal/kg;

To be set pursuant to the coal benchmark price (HPB). (However, because the benchmark price is in

FOB/Vessel terms, the price at mine must be adjusted by subtracting the costs of transportation, loading and

transshipment on the open sea from the benchmark price.)

・Coals under 3,000 kcal/kg;

Mining cost + margin (25% of the mining cost)

In other words, a power plant at mine can take coals for a price pursuant to the coal benchmark price if the

calorific value is over 3,000 kcal/kg, or a price equivalent to the mining cost plus a 25% margin in case of coals

under 3,000 kcal/kg. The cost, which covers overburden cost, mining cost, transport cost, crushing cost, land

cost, reclamation cost, maintenance cost and taxes, among others, is determined by the Ministry of Energy and

Mineral Resources and subject to the ministry’s reviews from time to time.

Coal prices at mine changed drastically on the date of September 22, 2014, of which details are shown in

54

Tab.1-14.

・Changing points: The new pricing system for low-rank coals (raw coals) destined to IPP business, coal

reforming business, coal gasification business and in-plant power generation, all in operation at mine, were

renewed on September 22 this year, with their data shown in the table below. Particularly notable is the

calorific-value restriction of over 3,000 kcal/kg and bindings below are lifted.

55

Tab.1-14 Newly-set Cost at Mine

Newly-set Cost at Mine

1) stripping soil cost US$2.41/BCM

2) transport cost (stripped soil) US$1.71/BCM/km

3) mining cost US$1.7/ ton

4) transport cost $0.28/トン/km

5) transport cost (to IPP's Coal Storage) (IT is based on the Agreement between the operators)

6) process cost US$1.98/ ton

7) depreciation cost US$1.17/ ton

8) reclamation cost US$0.27/ ton

9) security cost US$0.07/ ton

10) local (community) measures cost US$0.21/ ton

11) land cost US$1.99/ ton

12) overhead cost US$2.07/ ton

13) leased land cost US$0.11/ton

14) tax 20.30%

15) margin 25%

Source: Study Team based on the hearing from the MEMR

The above-mentioned rates are set based on the best practice (in terms of, not average values, but the best

performance among major shippers and others) in Indonesia and subject to reviews from time to time in reflection

to changing economic environment and so on. Meanwhile, this formula is applicable only to the newly

commissioned projects from September 22 and on, and the raw coal prices for existing projects are determined

based on conventional formula.On the other, in regard to mineral products tariffs, taxable target-range/conditions

(ex. corporate tax, VAT), land lease and bidding system (for land use for mining operations) in nationally

preserved regions, relevant government offices have been preparing necessary procedures, which are now at the

final stage with their outcomes imminent.

For the Ministry of Energy and Mineral Resources, the promotion of low-rank coal reforming business is

among its priorities to be solved at the earliest possible opportunity, and the ministry intends to continue relevant

information exchanges. The table above, to be posted as a coal pricing guideline, shows that individual mines

won’t suffer nothing by comparison even when calculating their mining cost with this formula.Newly inaugurated

President Joko Widodo (popularly known as Jokowi) cut oil subsidy from 8,500 INR to 6,500 INR/liter from

November 18, 2014 and on. Because the subsidy cut is very likely to cause soaring oil product prices ahead,

among the cost items listed above, those involving oil product consumption are expected to go up too.

c) Indonesian Coal Production Trends

Indonesia produced 213 million tons of coal in the first half of 2014. Despite the resource-nationalism-based

efforts to restrict coal exports, overseas shipments increased as much as 7.6% over the same period of the previous

year. Particularly exports to Southeast Asia where demand remains strong amounted to 158 million tons. If

going ahead as it is now, the exports should exceed an all-time high 148 million tons recorded in the first half of

2013 by 6.8%. Behind it, there are two major factors: One is Indonesian steaming coals are continuously used in

56

supplying fuels to energy-thirsty Asian power plants region-wide, and the other is major coal mining companies

are increasing their production in hopes to secure profits to cover falling coal prices worldwide. As a result,

albeit the will of the national government, Indonesia has become the top coal-exporting country in the world.

So far the Ministry of Energy and Mineral Resources projected total output in FY2014 at 421 million tons (flat

at the previous year’s level) on the assumption that a host of export restrictions could produce some effects.

Actually, however, FY2014 is likely to end in massive production increases by mining companies.

HBA for Indonesian coals with a calorific value of 6,322 GAR turned to be US$72.45 in July this year, down

US$1.19 from the HBA price in June. To cover the price down, the top six mining companies planned to boost

their production by 11.7%, which resulted in output increases. In June this year, the Indonesian Association of

Coal Producers warned that, if HBA continued to hover under US$73/ton, a large number of mining companies

should be forced to close their mines. The Association also insisted that, as a measure to cope with such a

situation, the government should offer mineral products tax revenues as the benefits to closed-mine employees.

Examinations of foreign coal markets around the world unveil that prices are on the decline. New Castle coal

benchmark price dropped some 20% from the year’s beginning to about US$69.90/ton now. The price is the

lowest in the last nearly five years. Obviously cheap crude oil worldwide can be cited as a major cause, and an

exit of the tumbling coal price trend is not seen yet.

d) Transport Means from Coal-producing to Consuming Areas

Explained here is transportation from general Indonesian mines to coal-consuming areas.

Primary transportation means from an inland coal mine is trucking to a river port. As for roads, it is required

to use those exclusively designed for coal transportation. Secondary transportation involves barges, which

forward coals to the open sea. Tertiary transportation is available in two ways. One is to transship coals to

vessels on the open sea or at a coal terminal before shipping to distant destinations. The other is short-distance

transportation to domestic outlets, in which barges are in use without transshipment. While barge transport is

usable for deliveries up to Bangkok Port, Thailand, further northbound deliveries usually involve transshipment to

vessels.

57

Fig,1-23 illustrates coal transportation means widely in use in Indonesia.

58

Fig,1-23 Transportation Means Widely in Use

石炭鉱山バージ（はしけ）

河川港外洋積替

石炭中継基地

　

Truck 大型船

大型船

バージ

輸出

輸出

国内向

バージ

Source: Study Team

Indonesian mines are often situated in mountainous areas. Because large trucks are banned to drive on public

roads in Indonesia due to ill-installed traffic conditions, river-based transportation is forming the mainstream.

As for Fig. 8,trucking from a coal mine to a barge is required to use an exclusive road for coal transport, where

driving are large trucks generally capable of loading as much as 30 tons of coals.

Fig,1-24 Exclusive Road for Coal Trucking（Photo）

Source: Study Team

After hauled by truck to a river port, coals are kept at a stockyard of the port, then forwarded to a barge by such

means as a belt conveyor for loading. In general a barge means an iron box of 300 feet X 100 feet in size which

is capable of housing some 8,000 tons of coals. With that type of barge coals are transported via river to the

open sea. Barge information is provided in Tab.1-15, which specifically offers general descriptions of two barge

specialist companies in Kalimantan.

coal mine barges

liver port

barges

open sea

coal

terminal

vessels

vessels

barges

to domestic

to abroad

to abroad

truck

59

Tab.1-15 Barge Information

Unit RUSIANTO AGUS STALINE

Quantity Remarks Quantity Remarks

No. of barges

in service

Tugboats Boat 106 Captive (with 12 boats

for chartering)

35 Captive (with 12 boats

for chartering)

Barges 102 (with 12 boats for

chartering)

35

Tug

specifications

Horsepower HP 800～2,400 1,000～2,000

Gross tonnage GT 147～296 112～171

Total length × width ×

depth

m 27.8×9×4.5 A 2,400-HP tug case Max. 30×8×3

Construction cost Rp 8~9 bil. Constant regardless of

HP

7~10 bil.

Maintenance cost Rp/year Approx. 1.5 bil. Around 10% of

construction cost

Fuel cost l/h 125 3,000 l/day 200 1 HR = 0.1 l/h

Barge

specificaitions

Loadage DWT 8,000 Max. 8,000 t 8,000 Max. 8,000 t

Total length × width ×

depth

m 94.08×25.3×6.1 8,000-ton barge 320Ft

case

91.44×24.38×5.5 8,000-ton barge 320Ft

case

Maximum draft m 5.5 5

Construction cost INR 22~25 bil. 15 bil. 300Ft-barge

(Singapore-made)

Maintenance cost Rp/year No maintenance for 5

years after

commissioned.

Source: Study Team based on the information provided by JCOAL

Fig,1-25 A River Port Scenery（Photo）

(Left: Coals loading onto a barge by belt conveyor; Right: An overall view of a barge tugged by a tug boat;

Bottom: An overall view of a barge and a tug boat)

Source: Study Team

60

Coals loaded onto a barge are transported to a river mouth, then bound for consuming-areas. When exported

to far distant outlets, there are two ways; transshipped from a barge to a vessel offshore or directly loaded to a

vessel at a coal terminal. As mentioned before, transportation by barge is possible to around Thailand.

Fig,1-26 is a satellite imagery showing coals, stored at a river-mouth stockyard, are forwarded by a conveyor belt,

thus loaded onto a vessel near the river mouth. It is the way of direct loading from an inland coal terminal to a

vessel.

Fig,1-26 A Route from River-mount Stockyard to Vessel via Belt Conveyore

Source: Google Earth

As shown in

61

Tab.1-13 presented before, the government publishes coal selling prices in FOB/vessel terms offshore but does not

unveil incurring costs, such as truck-based primary transportation costs and barge-based secondary transportation

costs. Based on the results of its hearing surveys made to coal mines so far, we calculated these costs. Though

the mines, or the information sources, should be left unnamed, transportation costs are found as shown in

Tab.1-16.

Tab.1-16 Transportation Cost from Mine to Vessel

Route transportation means transportation cost (US＄）

Mine - river port 30-ton truck 0.15 t・km

River port cost belt conveyor 3.30 t

River port - demand area 8,000 Tonbaji 0.05 t・km

River port - large vessels - loading 8,000 Tonbaji product Kawafune 2.00 t

Source: Study Team based on the information provided by JCOAL

(3) Situation in the target area

1) Development Risks

In Indonesia, which has continued to rapid economic growth, while a number of business opportunities exist,

there is also a wide variety of development risk.

a) Conditions of the Domestic Economy

The Seventh President Joko Widodo (graduated from Indonesia’s renowned University of Gadjah Mada), who

took office in October 2014 to succeed over a-decade-long reign by the Yudhoyono administration, originally was

a successful businessman in furniture exports, and later achieved outstanding political careers as the Mayor of

Solo and the Provincial Governor of Jakarta. He is a pro-commoners politician, who trumpeted political reforms

and an economic revival as his pledges during the presidential campaign. But, the media at home and abroad

reported the economy would force him a hard fight.1

By now, President Jokowi showed a will to carry out port, railway and electricity-related infrastructure projects

nationwide and, particularly, hammered out a policy to slash distribution costs by concentrating its efforts on

marine distribution infrastructure projects because Indonesia is an archipelago country consisting of 18,000-less

islands. In addition, announced was introduction of such mass transportation systems as subways into the six

cities, which include Jakarta, Semarang, Bandung, Surabaya (Bali), Medan (Sumatra) and Makassar (Sulawesi).

In regard to expropriation of land, which posed a bottleneck of investment, the President showed an attitude to

break a stalemate, if any, through the President’s positive involvement by himself, while referring to his successful

1 The News Week, a US weekly, carried an article entitled “A Disease of the ‘post-China’ Indonesian Economy,” which was

summarized below.:

“With its growth halted by the Asian currency crisis in 1997, the Indonesian economy has been depending on subsidies, of which

costs have been just swelling to date. The growth rate in the first quarter of this year turned to be 5.2%, a four-year low. The ratio

of fiscal deficits to GDP is nearing 3%. Above all, fuel subsidies account for nearly 16% of government spending today. The

generous subsidies squeeze government budgets, leaving little room for funding infrastructure projects. While international

organizations urge the country to increase infrastructure investments by raising fuel prices, over 100-million Indonesians (out of its

total population of 250 million) are living for less than US$2 a day. Already in the past, fuel price increases in an attempt to curb

subsidies have invoked protest demonstration and social unrests, which triggered the toppling of long-standing dictatorship

governments. Drastic reforms can prove fatal.” (Source) News Week, dated August 12, 2014

62

experience of loop-highway construction during his days as the Governor of Jakarta Province by overcoming

land-expropriation troubles by repeating dialogues with opposing residents. In specific terms, revealed are the

measures to install infrastructure and improve investment environment, such as one-stop service center where all

procedures required for foreign investment can be taken and the rule that basic business permits should be judged

within three days.

In November 2014, firmly taking a swift step to ax the so-far generous fuel subsidies, among others, the

President set to move toward infrastructure construction and improved investment climate, which can be cited as

Indonesia’s long-standing challenges. Besides, to dissolve account-balance deficits in structural terms requires

efforts to bring up an exports-oriented manufacturing industry of labor intensive type.

On the other hand, as for the financial market, banks’ tight liquidity and resultantly rising interests, as well as

the accumulation of domestic financial assets are worried as serious subjects to be solved. Among others,

mal-distributed economic activities pose a serious bottleneck on supply side. That is, the country’s production,

employment and consumption concentrates on Java, particularly its western area (in and around Jakarta) which

covers a mere 7% of the nation’s lands. From investors’ perspectives, Java can be counted as forming an

efficient market, but to expand industry and jobs throughout Indonesia, characterized by vast lands, is an

ambitious challenge in political terms too.

b) Exchange Risks

Around 2000 Indonesia suffered political and social unrests and, as a result, the Rupiah exchange market was

infected with a roller-coaster volatility. However, from 2004 onward, when the Yudohoyono administration was

inaugurated, the Rupiah market has turned stable, backed by stabilized social conditions and restored confidence

among investors. In 2009 the Rupiah plunged briefly due to the Lehman shock but restored to the pre-shock

level by yearend. Thus, the Rupiah exchange market remained stable during the last decade except a brief

moment immediately after the Lehman shock. This is attributable to a few factors. First, unlike the Asian

countries based on an exports-reliant growth model, Indonesia takes a local demand-led model. Second, political

and economic conditions have been stabilized under the Yudohoyono administration. Third, the current-account

surpluses increased thanks to growing exports, notably coal and palm oil.

Although the Rupiah, very volatile against the dollar and the yen, seems to be highly risk-ridden, Indonesia

depends nearly 70% of its GDP on domestic demand, thus being less vulnerable than other ASEAN members to

economic volatility in the West. However, an examination of Indonesia’s cross-border imports/exports reveals

that the value of IDR against the dollar plunged by 34% in the last four years. Though export terms in dollars

are turning favorable, some firms indebted in dollars are suffering so big exchange losses that should carefully be

watched.

Meanwhile, as late as December 2014, IDR marked a 16-year low, an about 11% drop from this year’s highest

recorded in April, and the Japan-affiliated manufacturers reliant on imported feedstock are now forced to have

some measures to tackle their cost increases. Because it results from the strong dollar worldwide, local

63

economists, while asserting the rate can fall to the 13,000~15,000 IDR, take an optimistic view that the US

economic recovery should have positive effects on the Indonesian export industries.

c) Natural Disasters

Because Indonesia, just like Japan, is situated on the Pacific-Rim volcanic belt, the country is natural

disasters-prone, such as earthquakes, tsunamis, volcanic eruptions and floods. According to a JAIC report, just

in the ten years from 1999 through 2008, natural disasters killed some 180,000 citizens, with an additional about

8.4-million suffered, and caused economic damages as serious as amounting to US$10 billion. Indonesia is an

earthquake-stricken country hit by earthquakes of over the magnitude 4 class as frequently as 400 times a year on

average. Furthermore, Indonesia has 129 active volcanos. Of them, including Mt. Merapi (in central Java), 17

volcanos are showing rumbles. Also the country is hit by frequent tsunamis resulting from earthquakes and

volcanic eruptions. Big earthquakes of the magnitude 7~8 class occur as frequent as once a year, with the latest

one, scaled at magnitude 8.6, braking out in April 2012 offshore North Sumatra. The area hit by the latest big

quake is the same as the one devastated by the Great Quake Offshore Sumatra in 2004 of which victims numbered

as many as some 300,000 including the missing.

In the meantime, some areas of Indonesia belong to the Asian monsoon belt, where heavy raining during rainy

seasons often causes floods and submersion-linked damages every year. For instance, the outbreak of floods in

January 2013 escalated into as serious state as causing the plural number of municipal authorities, including the

Metropolitan Jakarta, to proclaim a state of emergency.

(Source) JICA, Introduction to Japan’s Economic Cooperation to Indonesia in Various Fields (Field of Disaster

Prevention)2

d) Policy Changes

In the past Indonesia has propelled its economy with oil exports and oil-related industries as the prime mover.

Then, in more recent years, the country’ has been bolstering its economic growth by developing manufacturing

and service sectors. The Indonesian government has mapped out a host of aggressive industry-development

policies, including plans for manufacturing clusters, which involve electrical machinery, auto parts, textiles,

agricultural/fishery processed products, etc., to be installed in such areas as Java, North Sumatra and Sulawesi.

Key economic measures of the former President Yudohoyono were the decisive promotion of free trade and the

invitation of foreign firms. For instance, his administration entered into the EPA (Economic Partnership

Agreement) with Japan and realized the conclusion of China – ASEAN FTA (Free Trade Agreement) with China.

Likewise, concerning AFTA (ASEAN free trade area), proposed tariff cuts within the area were achieved as

scheduled. Given the improved climate for corporate management, a growing number of Japan-affiliated firms

have been launching into Indonesia to set up production centers or expand their basis there.

The advent of Mr. Jokowi, installed as the new President in October 2014, was a breakthrough event in the

Indonesian politics, still overshadowed by the long-standing elitism. It was a grass-root movement involving

more than a million volunteers in total that supported his presidential campaign. Yet, because the Indonesian

2 Source: JICA, Introduction to Japan’s Economic Cooperation to Indonesia in Various Fields (Field of Disaster Prevention)

64

Democratic Party of Struggle (PDI-P), where he started his political career, occupies only 20%-short at parliament,

the President is likely to face rough going in his parliament management and there is no knowing what will come

for his fiscal reforms. At any rate, in order to establish a redistribution system, a crucial challenge for Indonesia,

it is essential that Jokowi proves to be a competent President. Aside from a high pile of subjects, ranging from

repulsions of the vested-interests class against the President-led reforms to much-needed infrastructure projects,

typically roads and ports, there is no question that the new administration will cause a stir to the Indonesian

political culture.

e) Riots and Other Anti-social Actions

In Indonesia, few shocking incidents had happened after the Bali suicide-bomber terrorism in October 2002

(which killed 202 citizens including foreign-tourist visitors to a discotheque. But, in July 2009, at two hotels in

Jakarta City bombs exploded simultaneously, where nine citizens, including six foreigners, died and many got

insured. Focusing on terrorism in Indonesia in recent days, few damages by massive terrorism have been

reported thanks to intervention by the Indonesian Army and the police, but given continuous development of small

and medium demonstration and terrorism in size, precautions against terrorism are essential.

Jemash Iskamiya, an Indonesia-based international terrorist group, is said to be tied with Al Qaida, the terrorist

group responsible for the September 11 terrorist attacks, which means the existence of threats of terrorism remains

unchanged today. In addition, in Indonesia, militant separatists in Ache and Papua, where they have been

demanding their independence from Indonesia for years, are feared to cause social unrests, such as riots and

terrorism, within the provinces. Thus, Indonesia is confronted with not merely a menace of international terrorist

groups but also a threat of domestic separatist terrorism.

As for riots, the Jakarta riot in 1998, which destroyed the Chinese town in Jakarta, was an incident which

reminded many of that the Indonesian economy was still controlled by the Chinese merchants. Indonesia has the

largest number of the Chinese residents in the world. Though discrimination within the government and in the

society has been blurring gradually, no doubt this kind of threats persist even now. And yet, given such

developments as a Chinese-language media, previously prohibited, came officially on stage, a Chinese-Indonesian

was elected as the Deputy Governor of Metropolitan Capital Jakarta, and Chinese-Indonesians were appointed as

the State Ministers, democratization has steadily got rooted.

Lately, due to skyrocketing crude oil prices in 2012 squeezed, fuel subsidies squeezed the government budgets,

and a 33% hike in the fuel price announced by the government provoked a violent demonstration joined by more

than 80,000 citizens. But, it had little influence on citizens’ life partly because not a few participants in the

protest march were paid-protestors for 500 Rupiah/day each, 3

3 Source : The Ministry of Foreign Affairs, Website on Overseas Security (Guide to Security for Japanese Residents, Jakarta Japan

Club)

65

Fig,1-27 (Reference) SWOT Analysis on Indonesia (2014)

[Strengths]

・250-million population with rising incomes and enormous

potentials of the domestic market

・ Relatively stable economy less vulnerable to global

economic shocks

・Contribution to democracy-based politics

・Relatively steadfast banks; major banks are elastic to global

economic shocks.

[Weaknesses]

・Flagging exports/costly imports; especially oil/gas imports

result in continuing trade deficits in 2014.

・Corruption remains as a big problem. General election in

2014 turned to be highly political.

・Products dependent on the overseas economies are easily

influenced by the world commodity prices and have grave

impacts on exports and GDP growth.

[Opportunities]

・2014 general election spurred domestic economic activities,

of which contribution to GDP growth projected at 0.2% by the

Central Bank.

・Inflationary pressures in 2013 converged in 2014, with

general purchasing power expected to rise.

・High returns and giant size of the market offer an attractive

investment target to investors.

・World commodity prices are expected to be improved in

2014.

・Continued Abenomics can strongly lead to capital inflows

into emerging countries.

[Threats]

・Persistent uncertainty prior to the general election, which can

put a brake on local & overseas investments and

asset-management investments.

・Fears for political instability, though less likely, still exist.

・Potential flees (of short-term capital) caused by US monetary

easing still continue in 2014.

・ Rises in electricity tariffs and minimum wages can

discourage investors.

Source : Indonesia’s Economic Projections for 2014 and Electricity

Condition in Indonesia, DEN, Jan.,2014

66

2) Environment around the proposed project site

Cilegon, where the site slated for the proposed project (within the site of Anyer Plant owned by Asahimas

Chemical Co.), is a coastal industrial city situated in the westernmost Banten State in Java island. It is the center

of Indonesia’s heavy chemical industry where many steelworks and petrochemical plants are located.

Fig,1-28 Peripheral (Cilegon - Krakatau Steel Industrial Zone) of industrial clusters

Source : Google map

This area, where Krakatau Steel Co., the largest steelmaker in Southeast Asia, is located, forms Krakatau Steel

Industrial District. Aside from Krakatau Steel Co. and Krakatau POSCO Co., many plants run by such

companies as Siemens AG, Asahimas Chemical Co., Chandra Asri Petrochemical Co. and Pertamina (state-owned

oil/gas corporation run by the government of the Republic of Indonesia) are integrated in this area and, thus, the

Suralaya power plant

Krakatau POSCO Pertamina

Krakatau Steel 社

Asahimas Chemical

Chandra Asri Petrochemical

67

zone of this area has been developed well as an industrial district.In addition, as an industrial infrastructure,

Suralaya power plant, Krakatau Tirta industrial water treatment plant, (Ferry Terminal to cross to Sumatra) Merak

port, there is a Sunda Strait Bridge (plan).

Chapter2

Study Methodology

70

(1) Contents of FS works

1）FS contents

The FS works, made on a project to secure a new power resource by constructing a power plant in the site of

ANYER plant owned by Ashahimas Chemical Co. (ASC) in collaboration with PLN as well as private firms at

home and abroad, was designed to examine/verify an optimal approach (incl. project system/financing scheme)

and sundry conditions (on such aspects as institution/policy, technology, environment, and finance & economics)

for the planned project.

Fig. 2- 1 ANYER Factory

Research items of this FS work are:

① General information including those on electric utility sector

② Status-quo of existing capacities (power plants, substations, grids) and electricity market

③ Physical properties of coals to be used as fuels and their supply sources

④ Conceptual design, preparation of candidate equipment’s specifications, preparation of roughly estimated

construction costs, roadmap for project implementation in broad outline

⑤ Examinations of socio-environmental aspects

⑥ Permits-related situations in Indonesia

⑦ Indonesian partners’ capabilities for project implementation

⑧ Financial/economic analysis

⑨ Prospects for project financing

⑩ Japanese firms’ advantages in terms of technology, among others

2）FS target

The spot subject to the FS work is the site of ANYER plant owned by Asahimas Chemical Co. (ASC) (Desa

Gunung Sugih Jl. Raya Anyer Km 122 Cilegon 42447 Banten).

71

Fig. 2- 2 Location of the project

72

(2) Research methodology/system

1）Research methodology

During the FS works, chiefly based on first-hand data gathering in Indonesia, researchers visited the planned

project site and made interviews to relevant organizations, and so-collected information were put to prudent

analysis/reviews. As for research works in Japan, a wide variety of materials and information collected in both

Japan and Indonesia were well-organized and put to analysis. The outcomes of such works were used in a wide

range of subsequent works from preparation of the project’ design in broad outline, cost integration and

roadmap-making to economic/financial analysis and socio-environmental assessment, of which output was

summarized in the form of a report. In addition, to collect technological information of the most advanced

coal-fired power plants, researchers visited relevant firms as well.

2）Research system

Fig. 2- 3 Research System

（E&T Research Institute, Inc., proposer of the project）

President

Masami Nakakubo

Director

Seiji Tada

Energy and Environment Group

(Chief researcher) Hirokazu Yonezawa

(Research Advisor)

Hiromasa Iwasa

Director General

Jiro Uchida

Research Department

(Manager) Miharu Kishioka


(Principal reseacher) Hiroyuki Hayashi


(Principal reseacher) Yasuhiro Arakawa


(Reseacher) Natsumi Onish

(Research Advisor)

Tadao Ishikawa


(Visiting researcher) Tomoyuki Nakamura

（ASAHI Glass Co, co-proposer）

Project ManagerEssential Business Department, Business

Headquarter(Business Planning Group Leader)

Yoshihisa Horibe

Essential Business Department, Business Headquarter

(Director)Yasuyuki Ueda

(3) Research schedule

This FS work has been conducted from October 2014 through February 2015.

Chapter3

Justification, Objective and Technical Feasibility of the

Project

76

(1) Project’s Background, Needs and Others

1) Public background and necessity of the project

In Indonesia, while the power demand increases steadily with economic growth, it has fallen into serious power

shortage due to a delay of the development of power supply and the power transmission and distribution network.

According to the power supply business plan of PLN (RUPTL, 2013 2011 Edition), through 2013-2022, power

demand from 189TWh to 386TWh, it is expected to increase at an annual rate of 8.4% of momentum. To meet this

demand for electricity, in the entire country until 2022 but requires additional power generation supply capacity of

59.5GW, these 17.1GW (29%) is in the situation that is not decided prospect of development.

For this reason the Indonesian government has announced a policy to accelerate the development of power

supply and the power transmission and distribution network, including the coal-fired power plant, you're welcome

the introduction of foreign capital in capital investment. In order to strengthen power development, the

government recommends not only the power of PLN, but also IPP, PPS (Private Power Utility) by the private

sector.

On the other hand, Japanese companies, has the technology and know-how of the operation management (O &

M) for the coal-fired power plants, super critical pressure (SC), and superior hardware technology, including the

circulating fluidized bed (CFB). In addition, it is possible to take advantage of Japan's public finance for foreign

investment.

This project, using these technical and financial resources of Japan, and taking advantage of premises of Anyer

factory of Asahimasu Chemical located in West Java Cilegon City (ASC, Inc.), aims to built 600/450 MW scale

coal-fired power plant construction, suppling part of the power to PLN to contribute to Indonesia's power supply

and demand relaxation, contributing to formation of infrastructure projects, and strengthen the international

competitiveness of manufacturing industry.

2) ASC’s Business Environment

Asahimas Chemical (ASC) Co., a consolidated subsidiary of ASAHI Glass Co., Ltd., is an Indonesia-based

chlor-alkali manufacturer of the largest class in Southeast Asia and engaged in integrated manufacturing from

caustic soda/chlorine to polyvinyl chloride. Due to the below-described background, how to secure electric

power resources has become a matter of pressing need for the company, which is now forced to confirm and verify,

as soon as possible, specific methodologies and feasibility of power plant projects counted as viable options.

Aside from the option of single-handed in-house power generation, PPS (Private Power Utility), detailed later,

is positioned as a highly viable option among those put under examinations because it enables ① “increased

business efficiency thanks to scale merits” and contributes to ② “installation of power infrastructure which can

benefit not only the Indonesian part but also the side of corporate entrants.

a) Electricity tariff increases

In Indonesia, the electricity price has been set low in policy terms. But, given red-ridden management of the

state-run electric utility (Perusahaan Listrik Negara Persoro: PLN), electricity price hikes were decided in January

2014, though the price-increase targets were limited to large industrial customers alone.

77

Based on the decision, from 2014 through 2015, the tariff increases are scheduled as follows;

・Power Contract Category 14 (over 30KVA)/some 60 companies: up 65%

・Power Contract Category 13 (over 20KVA)/listed companies: up 39%

For ASC (falling in Category 13), the tariff hikes are worried to produce grave effects on its business

operations.

b) Power balance crisis becoming conspicuous

Because Indonesian efforts to install power infrastructure fail to catch up with its surging electricity demand

(partly attributable to the delays in money-stricken PLN’s power plant construction projects), from 2015 on, a

power balance crisis is becoming conspicuous, thus creating an additional worrying condition to the

above-mentioned cost-up problem which should be overcome by some means.

3) ASC’s business plans

As a result of the vigorous economic growth across the region, Southeast Asia is expected to mark long-run

expansion of demand for basic chemical products, indispensable goods for infrastructure. Backed by the strong

demand, ASC is planning to bolster its production capacity. By 2015 yearend, with additional capacities

installed, the company’s production capacity of caustic soda (already expanded to about 500,000 tons/year in

March 2014) will increase to some 700,000 tons/year, up 40% over the current level, and that of polyvinyl

chloride (PVC) will almost double to about 550,000 tons/year.

Asahimas Chemical Co., currently producing the products cited below, has done a decision-making that its

caustic soda production capacity should be expanded to 700,000 tons/year by the end of 2015.

・Caustic soda (NaOH) : Rayon, soaps/detergents, paper/pulp, chemicals

・Vinyl chloride monomer (VCM) : PVC feedstock

・Polyvinyl chloride resin (PVC) : PVC pipes, films, electric wire coatings

Tab. 3- 1 ASC’s Current & Expanded (2015 Yearend) Capacities (1,000t)

Current Capacity After Expanded

Caustic soda 500 700

VCM 400 800

PVC resin 300 550

Illustrated below is the flow of manufacturing by ASC. It should be noted that production of caustic soda and

chlorine alike are very much electricity-intensive.

78

Fig. 3- 1 ASC’s Manufacturing Flow

Because the electrolytic equipment to produce caustic soda and chlorine, the latter being PVC feedstock, is

characterized by heavy weight held by electricity cost, the above-discussed recent condition (rising

electricity-price problem) is now reckoned as a crucial subject that can pose so serious impediments to the

company’s business development that it should be solved quickly and effectively.

For these reasons, ASC plans to offer its captive site for the proposed project of coal-fired power construction in

hopes to receive from the power plant, after it is built, less expensive power supply than that from PLN (state-run

electric utility).

79

(2) Upgrading and Rationalization of Energy Use

Coal-fired power plant in Indonesia that is currently running, subcritical pressure power generation system has

become a mainstream.

In this project, by adopting a supercritical pressure power generation system (and CFB power generation

system), sophisticated rationalization of energy use will be achieved.

Pulverized coal fired (PC) fired power systems are widely used as very reliable established techniques.

In pulverized coal-fired thermal power system, supercritical coal-fired power generation system that tried to

power generation efficiency improvement, there are many of introduction track record around the 50/70 ten

thousand kW class in Japan. Power generation end thermal efficiency of this power system is 42.5% (sending end:

40.0%, both HHV basis) improved to, sophistication and streamlining of coal use has become feasible.

In addition, it is also effective in environmental protection. Carbon dioxide and sulfur oxides per amount of

power generation in thermal power plants, with regard to emissions of nitrogen oxides, I can achieve a superior

value.

In Indonesia, coal-fired power plant of supercritical pressure power generation system is still place 3 (① Paiton

Ⅲ (expansion): 815 000 kW, ② Cirebon: 660 000 kW, ③Cilacap Baru / Adipala: 66 万 kW) is the only, has

been scheduled to be the introduction of 600 000 kW-class future.

On the other hand, CFB power generation scheme, has the advantage that you can accommodate a wide range

of coal types, adapted to the Indonesian sub-bituminous coal, can be adapted to many 4,000kcal / kg or less of

low-grade coal moisture.

80

(3) Multi-Angle Examinations Necessary for Deciding Project’s

Contents and Others

1) Outline and Particulars of Relevant Regulations/Policies

a) Electric Utility Industry System

In Indonesia, where PLN (former Indonesian National Electric Power Corporation) had been responsible for

power production, transmission and distribution as an integrated operator, a new Independent Power Producer

(IPP) system was introduced in 1992, followed by the employment of PPU (Private Power Utility) under the

newly-enacted Electricity Act of 2009. At present, PLN holds 80%-strong of the country’s installed capacity,

with the remainder complemented by private power producers (IPP, PPU) and in-house power generation.

b) Electricity Act

The Indonesian electric utility industry has been long regulated by the “former Electricity Act” enacted in 1985.

But, amid the worldwide streams of electricity liberalization, a “new Electricity Act” was enacted in 2002, but it

was short-lived.

The Electricity Act of 2002, nullified by the Court of Constitution in 2004, could not function virtually, which

subsequently allowed the “former Electricity Act” to revive.

Later, in 2006, a “newly-drafted electricity bill” was freshly proposed to the parliament, which was passed in

September 2009 and enacted under the official title of the “Law No.30 of 2009 on Electricity” (New Electricity

Act), which has been effective to date.

(The “New Electricity Act” referred to hereinafter chiefly means the “Electricity Act of 2009” currently

enforced.)

The particulars to date are summarized below:

① IPP participation permitted (1992)

Given the worldwide currents of deregulation since the 1980s, combined with tightening power supply,

Indonesia has also committed to liberalization of public utility businesses. In 1992, with a Presidential Decree

on Private Capital-based Electric Utility Industry (No. 37) issued, participation by IPPs, including foreign capital,

was approved.

② Reforms of the electric utility industry initiated (1998)

Later, severely hit by the Asian currency crisis in 1997, the Indonesian rupiah plunged sharply and PLN, traded

with IPPs on the US dollar basis, was squeezed by exchange losses where the supply cost outstripped the selling

price. Under such circumstances, the Indonesian government announced in 1998 its policy to reform the electric

utility sector’s structure, and thus initiated revamping of the electric utility industry.

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③ New Electricity Act enacted (2002)

With the “Law on Electricity” (New Electricity Act) enacted in 2002, the move toward splitting/privatization of

the electric utility industry was determined. In specific terms, it was decided to forward “introduction of

competitive market,” “splitting/privatization of the electric utility industry,” “liberalization of power production

and retailing sectors,” “control of transmission & distribution systems by PLN,” “foundation of a power-market

watchdog committee and the transmission & distribution (wheeling) tariff-setting by the committee,”

“appointments of power system manager and power market manager” and so on.

Meanwhile, because Indonesia is an archipelago nation where economic and infrastructure conditions differ

much among different regions, the regions across the country are grouped into either competitive or

non-competitive regions and, in regard to the non-competitive region, it is decided that, as in the past, the priority

is given to the conventional supply system run by the state-owned utility.

Under the New Electricity Act, the principle of competition is introduced into the power production and

marketing sectors in the competitive regions. On competitive regions, it is also decided to set a power-market

supervisory body (BAPEPTAL) as a watchdog over the competitive market.

④ New Electricity Act nullified by court (2004)

Subsequently in 2004, PLN’s labor union, among others, who opposed the introduction of competitive principle

and argued that the New Electricity Act violated the constitution, brought the case to the Court of Constitution.

In December 2004, the Court of Constitution ruled that the New Electricity Act of 2002 infringed the Article 33

of the constitution, which provided that “any production sector which is important for the nation and has an

influence on living of a large number of people shall be controlled by the nation,” and thus nullified the Act.

⑤ Former Electricity Act revived

After the new act was nullified by the court judgment, the former Electricity Act (of 1985) was revived.

However, because the former Electricity Act was an old statute enacted two decade ago, it was found very

inconvenient when promoting power resources development funded by private investment. To make up such

inconvenience, provisional measures have been taken to promulgate a number of ministerial ordinances, which

ruled IPP participation procedures, business permits, etc.

⑥ ”New Electricity Act” enacted anew (2009)

Later in 2006, a newly-drafted “new electricity bill,” which expressly stipulated electricity rate-setting by the

government and the warrant of electricity supply to the people, among other things, was proposed to the

parliament. In September 2009, the “Law No. 30 of 2009 on Electricity” (or the newly-drafted New Electricity

Act) was passed and enacted.

The newly-enacted law basically follows the context of the former Electricity Act (1985, Law No. 15) and,

while providing that the nation shall take the responsibility for electricity supply (= the electric utility business

shall be controlled by the nation and undertaken by the government), it also expressly stipulates that “in order to

increase the nation’s ability of electricity supply further, so fa as not harming national interests, other state-owned

enterprises, public-run enterprises, private firms, cooperatives and so on shall be granted maximum possible

opportunities for their undertaking electricity supply services,” thus opening the road to private participation in

82

electric utility business.4

Under this newly-enacted law, introduced was the PPU (Public Power Utility) system, detailed later.

c) Legal system of the New Electricity Act

Just like Japan’s Electric Utility Industry Law, the Indonesian newly-enacted New Electricity Act stipulates

basic matters on the electric utility industry, with more detailed matters ruled by government regulations,

presidential decrees and ministerial ordinances.

The New Electricity Act and its subordinate statutes are chiefly under the jurisdiction of the Ministry of Energy

and Mineral Resources (MEMR in short in English, ESDM in short in the Indonesian language).

Provided below is a list of the New Electricity Act and its subordinate statues, which was prepared based on the

information gained from MEMR’s web site.5

In the meantime, these statues all are available in the Indonesian language only.

Tab. 3- 2 New Electricity Act and Subordinate Statutes

Note) Shown in each column are ① translated Japanese title of the statue, ②title of the statue (original title in

Indonesian language), ③ translated English title of the statue, ④ URL of the statue (in Indonesian language)

in this order.

Undang Undang Nomor 30 tahun 2009 Tentang Ketenagalistrikan

Law No. 30 of 2009 on Electricity

http://prokum.esdm.go.id/uu/2009/UU%2030%202009.pdf

Peraturan Pemerintah No.14 Tahun 2012 Tentang Kegiatan Usaha Penyediaan Tenaga Listrik

Government Regulation No.14 of 2012 About the Electricity Supply Business Activity

http://prokum.esdm.go.id/pp/2012/PP%2014%202012.pdf

Peraturan Pemerintah No.42 Tahun 2012 Tentang Jual Beli Listrik Lintas Negara

Government Regulation 42 of 2012 About Sale and Purchase of Electricity Cross Country


Peraturan Pemerintah No.62 Tahun 2012 Tentang Usaha Jasa Penunjang Tenaga Listrik

Government Regulation 62 of 2012 About Electric Power Service Business Support


Peraturan Presiden RI No.4 Tahun 2010 Tentang Penugasan Kepada PT Perusahaan Listrik Negara (Persero)

Untuk Melakukan Percepatan Pembangunan Pembangkit Tenaga Listrik Yang Menggunakan Energi

Terbarukan, Batubara Dan Gas

Presidential Regulation No. 4 of 2010 Concerning the Assignment To PT PLN (Persero) To Perform Accelerated

Development of Power Plants Using Renewable Energy, Coal and Gas

http://prokum.esdm.go.id/perpres/2010/Perpres%204%202010.pdf

①Peraturan Presiden RI No.71 Tahun 2006 Tentang Penugasan Kepada PT. Perusahaan Listrik Negara

(Persero) Untuk Melakukan Percepatan Pembangunan Pembangkit Tenaga Listrik Yang Mengunakan

Batubara.

4 http://energy-indonesia.co m/07basicinfo/0140319inturn.pdf 5 http://www.esdm.go.id/regulasi.html







http://energy-indonesia.co/

83

②Peraturan Presiden RI No.59 Tahun 2009 Tentang Perubahan Atas Peraturan Presiden Nomor 71 Tahun 2006

Tentang Penugasan Kepada PT Perusahaan Listrik Negara (Persero) Untuk Melakukan Percepatan

Pembangunan Pembangkit Tenaga Listrik Yang Menggunakan Batubara

③Peraturan Presiden RI No.47 Tahun 2011 Tentang Perubahan Kedua Atas Peraturan Presiden Nomor 71

Tahun 2006 Tentang Penugasan Kepada PT Perusahaan Listrik Negara (Persero) Untuk Melakukan

Percepatan Pembangunan Pembangkit Listrik Yang Menggunkan Batubara

(In English)

①Presidential Regulation No. 71 of 2006 on Assignment to PT. State Electricity Company (Persero) Acceleration To

Perform The Development of Power Plant Using Coal.

②Presidential Regulation No. 59 Year 2009 on Amendment to Presidential Regulation No. 71 Year 2006 on Assignment

to PT State Electricity Company (Persero) To Perform Accelerated Development of Power Plant That Uses Coal

③Presidential Regulation 47 of 2011 on the Second Amendment to Presidential Regulation No. 71 Year 2006 on

Assignment To PT PLN (Persero) To Perform Accelerated Development of Coal Power Plants that use

（URL）

① http://prokum.esdm.go.id/perpres/2006/perpres_71_2006.pdf

② http://prokum.esdm.go.id/perpres/2009/Perpres%2059%20tahun%202009.pdf

③ http://prokum.esdm.go.id/perpres/2011/Perpres%2047%202011.pdf

Keputusan Menteri ESDM No. 1122 K/30/MEM/2002 Tentang Pedoman Pengusahaan Pembangkit Tenaga

Listrik Skala Kecil Tersebar

Decision of the Minister of Energy and Mineral Resources No. 1122 K / 30 / MEM / 2002 about Guidelines Exploitation

Small Scale Power Plant Spread

http://prokum.esdm.go.id/kepmen/2002/kepmen-1122-2002.pdf

Peraturan Menteri ESDM No.01 Tahun 2012 Tentang Perubahan Atas Peraturan Menteri ESDM Nomor 15

Tahun 2010 Tentang Daftar Proyek-Proyek Percepatan Pembangunan Pembangkit Tenaga Listrik Yang

Menggunakan Energi terbarukan, Batubara, Dan Gas Serta Transmisi Terkait

Minister of Energy and Mineral Resources Regulation No.01 of 2012 Changes in the Regulation of the Minister of

Energy and Mineral Resources No. 15 of 2010 on List of Projects to Accelerate Development of Power Plant That Uses

Renewable Energy, Coal, and Gas Transmission And Related

http://prokum.esdm.go.id/permen/2012/Permen%20ESDM%2001%202012.pdf

Peraturan Menteri ESDM No.04 Tahun 2012 Tentang Harga Pembelian Tenaga Listrik Oleh PT PLN (Persero)

Dari Pembangkit Tenaga Listrik Yang Menggunakan Energi Terbarukan Skala Kecil Dan Menengah Atau

Kelebihan Tenaga Listrik

Minister of Energy and Mineral Resources Regulation No.04 of 2012 about the Power Purchase Price by PT PLN

(Persero) From Power Plants Using Renewable Energy Small and Medium Scale Or Excess Power


Peraturan Menteri ESDM No.22 Tahun 2012 Tentang Penugasan Kepada PT Perusahaan Listrik Negara

(Persero) Untuk Melakukan Pembelian Tenaga Listrik Dari Pembangkit Listrik Tenaga Panas bumi Dan harga

Patokan Pembelian Listrik Oleh PT Perusahaan Listrik Negara (Persero) Dari Pembangkit Listrik Tenaga Panas

Bumi

http://prokum.esdm.go.id/perpres/2006/perpres_71_2006.pdf

http://prokum.esdm.go.id/perpres/2009/Perpres%2059%20tahun%202009.pdf


http://prokum.esdm.go.id/kepmen/2002/kepmen-1122-2002.pdf



84

Minister of Energy and Mineral Resources Regulation 22 of 2012 on Assignment to PT State Electricity Company

(Persero) To Perform Purchase of Electricity from Geothermal Power Plants And Electricity By reference price Purchase

PT PLN (Persero) From Geothermal Power Plant


Peraturan Menteri ESDM No.28 Tahun 2012 Tentang Tata Cara Permohonan Wilayah Usaha Penyediaan

Tenaga Listrik Untuk Kepentingan Umum

Regulation of the Minister of Energy and Mineral Resources 28 In 2012 Areas of Application Procedures Electrical

Power Supply Business for Public Interest


①Peraturan Menteri ESDM No.04 Tahun 2007 Perubahaan Atas Peraturan Menteri Energi Dan Sumber Daya

Mineral Nomor 01 Tahun 2006 Tentang Prosedur Pembelian Tenaga Listrik Dan Atau Sewa Menyewa Jaringan

Dalam Usaha Penyediaan Tenaga Listrik Untuk Kepentingan Umum

②Peraturan Menteri ESDM No. 01 Tahun 2006 Tentang Pembelian Tenaga Listrik dan / atau Sewa Menyewa

Jaringan Dalam Usaha Penyediaan Tenaga Listrik untuk Kepentingan Umum

(In English)

①Minister of Energy and Mineral Resources Regulation No.04 Year 2007 Amendment to the Regulation of the

Minister of Energy and Mineral Resources No. 01 Year 2006 on Procedures Power Purchase Or Lease And

Networking In Business Electricity Supply For the Public Interest

②Minister of Energy and Mineral Resources Regulation No. 01 In 2006 About the Power Purchase and / or Lease

Network In Power Supply Business in the Public Interest

① http://prokum.esdm.go.id/permen/2007/permen-esdm-04-2007.pdf

② http://prokum.esdm.go.id/permen/2006/permen-esdm-01-2006.pdf

Peraturan Menteri ESDM No. 02 Tahun 2006 Tentang Pengusahaan Pembangkit Listrik Tenaga Energi

Terbarukan Skala Menengah

Minister of Energy and Mineral Resources Regulation No. 02 In 2006 Exploitation of Renewable Energy Power Plant

Scale Medium

http://prokum.esdm.go.id/permen/2006/permen-esdm-02-2006.pdf

Peraturan Menteri ESDM No. 0010 Tahun 2005 Tentang Tata Cara Perizinan Usaha Ketenagalistrikan Untuk

Lintas Provinsi Atau Yang Terhubung Dengan Jaringan Transmisi Nasional

Minister of Energy and Mineral Resources Regulation No. 0010 Year 2005 About the Business Licensing Procedures

For Traffic Electricity Province Or Connected With National Transmission Network


Undang Undang Nomor 2 Tahun 2012 Tentang Pengadaan Tanah Bagi Pembangunan Untuk Kepentingan Umum

Law No. 2 of 2012 on Land Procurement for Development for Public Interest

http://bpjt.pu.go.id/uploads/files/21/f33f138186b999064209a15eff14065f.pdf







http://bpjt.pu.go.id/uploads/files/21/f33f138186b999064209a15eff14065f.pdf

85

2) Details of relevant regulations/policies

Focusing on the electric-utility regulations which are likely to influence the project examined under this FS

works, their details are stated in this section.

a) Outline of the regulations

・At present, electric power-related businesses in Indonesia are regulated by the Law No. 30 of 2009 on

Electricity (referred to as the New Electricity Act in this report) and relevant ordinances (government

regulations, presidential decrees, the Energy & Mineral Resources Ministry’s ordinances (hereinafter referred

to simply as the ministerial ordinances), etc.).

・”Electricity supply services” in Indonesia, under the Article 9 of the New Electricity Act, are roughly grouped

into two categories below:

① Electricity supply services for public use (Article 9-a): PLN (State-run enterprise), IPP (Independent

Power Producer), (non-PLN) PPU（Public Power Utility）

(Note: PLN can be counted as a kind of PPU.)

② Electricity supply services for in-house use (Article 9-b): In-house power generation

・In the part below, based on statute/literature studies as well as first-hand information gained by interview

surveys made to the MEMR and PLN, the regulations applicable to IPP and PPU (other than PLN) are

outlined.

b) Regulations applicable to IPP

① Positioning under the New Electricity Act

・Falling under “electricity supply services for public use” stipulated in Article 9-a of the Act.

② Business license

・Pursuant to Article 19(2) of the Act, IPP is required to obtain an electric utility business license

(IUPTL：Ijin Usaha Penunjang Tenaga Listrik).

③ Power selling to PLN

・Whole output to be sold to PLN, which is an essential condition.

・Long-term contract, like a 25-year agreement, is taken for granted.

・The right of preferential negotiation on long-term power purchase agreement (PPA) with PLN is

obtained based on biddings offered by PLN.

・Details are ruled by the Government Regulation No. 14 (2012), the Ministerial Ordinance No.1 (2006)

and its amended-version, that is, the Ministerial Ordinance No.4 (2007), as well as the Ministerial

Ordinance No.5 (2009).

④ Power marketing to consumers (retailing)

・Given the essential requirement for selling the whole output to PLN, retailing to consumers is not

possible as a matter of course.

・During the former Electricity Act days, in such industrial complexes as Cikarang, IPP was allowed

direct supply (specified supply service) to consumers in some cases, which are totally ruled out today.

86

c) Regulations applicable to PPU

① Positioning under the New Electricity Act

・Falling under “electricity supply services for public use” stipulated in Article 9-a of the Act.

② Business license

・Pursuant to Article 19(2) of the Act, PPU is required to obtain an electric utility business license

(IUPTL：Ijin Usaha Penunjang Tenaga Listrik).

③ Power selling to PLN

・Power can be sold to PLN on condition that PLN is in need of the power being offered.

・Two ways are available; one is to sell part of output to PLN, and the other to sell the whole output to

PLN once, then buy back some from PLN.

・The power selling price is set basically with B-to-B negotiations with PLN. Meanwhile, in the

buy-back case, the selling price is determined with B-to-B negotiations with PLN by taking the cost

build-up menthod as the basis.

・The Energy & Mineral Resources Ministry is now drafting relevant ministerial ordinances in preparation

for their enactment. It is unknown which of a-single-year or a long-term is specified in the

currently-drafted ministerial ordinances as a standard contract term.

④ Power marketing to consumers (retailing)

・Under Article 10 of the Act, PPU which obtains WU (detailed later) can undertake integrated services of

power production, transmission, distribution and retailing, and also offer distribution and (or) retailing

services.

・Retail price is set by B-to-B negotiations first, then needs to gain the local government’ approval.

・The benchmark power purchase price in the buy-back case from PLN is set at 1,191Rp./kWh, which can

be lowered by negotiations.

⑤ Obtaining a WU

・PPU which hopes to offer distribution/retailing services to consumers is required under Article 10

(3)~(5) to obtain WU (Wilayah Usaha: business area) where the PPU is allowed to offer its

distribution/retailing services (ex. plant site).

・To obtain WU requires PLN’s agreement and MEMR’s permit.

・If well-negotiated unofficially beforehand, WU can be obtained in two months at the shortest.

・Details of WU are ruled under the Ministerial Ordinance No. 28 (2012).

Tab. 3- 3 Indonesia’s Legal System on Power Supply Services

Utility

type Action

Allowed/

needed/

or not

Legal system Explanations

IPP Sell (to PLN) Allowed ・Falling under Art. 9-a (for public use)

・Details ruled by MEMR ordinances

Nos. 14 (2012), 4 as amended (2007)

and 5 (2009).

・Bidding system

・Long-term contract

・Whole output to be sold to PLN as

an essential requirement.

Retail (to consumers) Not ・Selling whole output to PLN is an ・To such industrial complexes as ﾁ

87

Utility

type Action

Allowed/

needed/

or not


allowed essential requirement, which rules out

retailing to consumers.

ｶﾗﾝ specified district supply was

allowed in the past, which is not

allowed today.

Backup - ・None in specific terms (perhaps) ・With whole output sold to PLN,

no need for PLN’s backup except

the case in-house needs must be

covered.

WU acquisition Not

needed

・Not required pursuant to Art.10 ・ No need for WU acquisition

because only power production

(with whole output sold to PLN) is

allowed and no distribution &

retailing services offered to

consumers.

IUPTL acquisition Needed ・Permit for electric utility services

(IUPTL) required under Art.19(2).

PPU Sell (to PLN) Allowed ・ Ordinance under preparation by

MEMR.

・B-to-B contract (no precedent)

・ In buy-back case after selling

whole output once, the selling

price is set based on cost

calculation and B-to-B

negotiations.

・On contract term under MERM

ordinance, which of a single-year

or a long-term is specified remains

unclear.

・PLN’s agreement is a necessary

condition.

Retail (to consumers) Allowed ・Falling under Art. 9-a (for public use)

・Art.10 allows (integrated services of)

production, transmission, distribution

and retailing as well as distribution

and/or retailing conditional on WU

acquisition.

・Price, to be settled by B-to-B

negotiations, also requires local

government’s approval.

・For buy-back case after selling

whole output to PLN once,

benchmark price is set at 1,191

Rp/kWh, which can be lowered by

negotiations.

Backup Allowed ・PLN’s general electricity tariffs are ・Choose either firm or non-firm

88

Utility

type Action

Allowed/

needed/

or not


regulated by MERM ordinance No. 31

(2014). But, backup fee can be set

pursuant to PLN’s rules.

interconnection.

WU acquisition Needed ・Required under Art. 10 (3) ~ (5).

・Details ruled under MERM ordinance

No. 28 (2012).

・ Both PLN’s agreement and

MEMR’ permit are required.

・ If well-negotiated unofficially

beforehand, the above can be

gained in two months at the

shortest.

IUPTL acquisition Needed ・Permit for electric utility services

(IUPTL) required under Art.19(2).

In-house

power

producers

Sell (to PLN) Allowed ・Allowed pursuant to Art. 23 (3).

・Details ruled under MERM ordinance

No. 4 (2012).

・ Benchmark price set at 656

Rp/kWh (Higher price requires

MEMR’s approval).

・A-single-year contract

In-house use Allowed ・Allowed pursuant to Art. 23.

・Permit for operation (Izin Operasi) by

Cilegon City is required under Art. 19

(2).

Backup Allowed ・PLN’s general electricity tariffs are

regulated by MERM ordinance No. 31

(2014). But, backup fee can be set

pursuant to PLN’s rules

・Choose either firm or non-firm

interconnection.

WU acquisition Not

needed

- -

IUPTL acquisition Not

needed

- -

※1 When interconnecting power resources to PLN’s grid, at least a month is necessary for KKO (grid impact

study).

※2 WU (Wilayah Usaha): business area

※3 IUPTL(Ijin Usaha Penunjang Tenaga Listrik) a permit for electric utility services required under the New

Electricity Act

※4 IPP: Independent Power Producer

※5 PPU: Private Power Utility

※6 MEMR is currently examining a power wheeling mechanism which is applied to IPP, PPU and in-house power

producers when they offer power wheeling/retail wheeling to consumers by using (lending) PLN’s grids.

89

3) Views held by relevant offices

In order to learn electric-utility regulations which can influence the development of the proposed project in the

days ahead, interview surveys were made to competent offices in Indonesia. The information furnished by them

is summarized below.

a) Summary

Major contents of electric-utility regulations which are unveiled during our interview surveys to Indonesia’s

competent offices are summarized in the table below.

Tab. 3- 4 Major Contents of Electric Utility Regulations by Producer Type (Summary)

Type Operator WU Power sale to PLN Supply to consumers Remarks

IPP

Single-

Handed

SPC

Not required

Should be sold 100%

to PLN.

Bidding

Long-term contract

Not allowed. －

PPU

Single-

Handed

SPC

Required

Can be sold by B-to-B

trade (but PLN hopes

to purchase whole

output, if possible).

MEMR’s ordinance

under preparation.

Supply to the area

covered by acquired

WU is allowed (supply

to consumers in any

other areas not

allowed).

－

In-house

power

producers

Counted as

identical to

consumers

Not required

Surplus output can be

sold.

Fixed price

Annual contract

Supply within the plant

site is allowed. Supply

to the outside not

allowed.

With generating

capacity leased by

SPC and the like, the

consumer can operate

the capacity as its

operator.

b) The Ministry of Energy and Mineral Resources (MEMR): General Bureau of Electricity

The interview was made, basically in reference to the two cases cited below, in hopes to learn chiefly their

possibilities from the legal regulatory aspect.

① Inverse-current-to-PLN available case (with surplus output available at IPP, PPU & in-house power

producers)

② Inverse-current-to-PLN unavailable case (with surplus output unavailable at IPP, PPU & in-house power

producers)

・In-house power producers (falling under Article 9-b of the New Electricity Act) are required to obtain the

specified permit under the New Electricity Act. In this case, the competent office directly involved in

permitting the proposed project is the City of Cilegon.

・ In-house power generation, compared with other private power resources (PPU, IPP), involves easier

90

permit-gaining procedures in relative terms.

・In case the power resource is owned by a SPC (in-house power producer) and power output is sold from the SPC

to a consumer (plant), the case is taken as involving power trading, whereby the SPC is reckoned as not an

in-house producer but a PPU (Private Power Utility) subject to more complicated procedures.

・PPU is a kind of those defined in Article 9-b of the New Electricity Act (power supply services for public use)

and is a private entrant into the sector of power supply services for public use, where PLN has been in service.

・When a third party, typically SPC, offers in the capacity of PPU distribution and retailing services to consumers

(ASC), it is required under Article 10 (3)~(5) of the New Electricity Act to obtain a WU (Wilayah (area), Usaha

(business) = Business Area). To gain a WU first requires PLN’s agreement and the government’s approval,

which involves painstaking procedures. So far, there have been about 20 cases of WU acquisition.

・Detailed rules on WU acquisition are provided under the MEMR’s Ministerial Ordinance No. 28 (2012).

・When SPC leases its captive power production capacity and the like to a consumer (Anyer Plant) and the latter

commits to power generation there, the case is taken as not involving power trading. Accordingly, without

power trading, this case deems to cause no problems in electricity regulatory/institutional terms and thus the

case can be counted as fully viable.

・IPP is approved nothing but to sell the whole output to PLN. In the past, direct retailing from IPP to such

consumers as industrial complexes has been approved in some cases, which are ruled out today.

・When part of output is sold from a power resource to PLN, the case is not allowed for any IPP for the

aforementioned reason. As for PPU, the case is allowed conditional on WU acquisition. In case of surplus

output sold from SPC to PLN, it is allowed under the provision of Article 23 (3) of the New Electricity Act.

・Detailed rules on SPC’s surplus output purchasing are provided under the MEMR’s Ministerial Ordinance No. 4

(2012), and the benchmark purchase price is set at 656 Rp./kWh. Any price over the benchmark needs an

approval of the government (MEMR).

c) PLN: Officer in charge of Power System Planning

・Power plant construction generally takes 48 months from the start (of which definition remains unknown) to

commissioning.

・In the SPC case (where power producer is identical to consumer) and the PPU case (where power producer and

consumer are different entities) alike, PLN’s backups are available for emergency cases (during periodical

inspections, accidental outage). But, it costs high (firm fixed costs + extra costs incurring in the backup

service).

・The backup fee is settled, within the range pursuant to the government’s tariff regulations, by negotiations

between PLN and the backup beneficiary in principle.

・In case surplus output is sold to PLN, the case is allowed under the New Electricity Act if the seller is in-house

power producer, whereby the benchmark price (7~8 cents/kWh) is set under the MEMR’s Ministerial

Ordinance No. 4. Any price over the benchmark needs an approval of the MEMR.

・Surplus output can be sold from PPU to PLN, with the tariff settled by B-to-B negotiations. However, so far

there has been no case where surplus output was sold from PPU to PLN.

・Output can be sold from PPU to a consumer (plant) conditional on WU acquisition. The selling price, first

settled by B-to-B negotiations, needs an approval of local government (though specific competent office

91

remains unconfirmed).

・PLN welcomes IPP. As for in-house power producers and PPU, PLN is taking a “please-do-it” (as-you-like)

stance.

・When the owner of power resource is a third party, typically SPC, WU acquisition is necessary if its power

output is sold directly to a consumer (plant). On the other hand, when the owner of power resource is a third

party, notably SPC, and power is produced there by leasing the generation capacity to the consumer (plant),

the case is treated in the same manner as ordinary in-house power generation. That is, leasing system is fully

viable.

・WU acquisition, extremely hard in the past, is becoming easier today. In principle it can be gained only if the

MEWR and PLN agree.

・However, so far WU acquisitions within the PLN service areas numbered a mere 3 cases, all involving industrial

complexes.

(Note: To the same question made to the MEMR yesterday, the MEMR official answered “20 cases.” It is reckoned that the 20

cases included WU acquisitions in not-yet-electrified areas (outside PLN service areas) and WU acquisitions by PLN’s

subsidiaries.)

・Meanwhile, direct supply from IPP to a consumer (so-called specified district supply in Japan), allowed as

special cases in the past, is totally ruled out today.

・Power wheeling now under consideration by the MEMR (so-called PPS in Japan = retail wheeling, and power

wheeling) seems hard to be realized in the short run because PLN’s grids have little room for that due to limited

reserve capacity.

・Definitions of IPP, which should be detailed by some literature, chiefly include ① its output sold 100% ②

long-term power purchase agreement, and ③ PLN-led biddings.

・PLN’s long-term supply service plan puts that, particularly in the years to 2017, power-resources supply is

expected to remain in an extremely tight condition.

d) PLN：Marketing Division

① Project model involving PPU and WU

・Power output sold from PPU to ASC is allowed conditional on WU acquisition. But, from the PLN perspective

(or as a view held by the officer in charge), the systems described below are preferable to PPU-to-ASC direct

retailing.

(It should be noted the above-mentioned view is nothing but a privately-conceived view of the officer in charge.

Ultimately, it seems that the matter is settled by further negotiations with PLN.)

A. The whole output to be sold once from PPU (SPC) to PLN.

・The selling price is based on the cost method (A+B+C+D) and settled by B-to-B negotiations between the

parties.

・A＝capacity investment cost, B＝O&M fixed cost, C＝fuel cost, D＝O&M variable cost

・By the way, the benchmark price applicable to surplus output sold by an in-house power producer to PLN,

set at 656 Rp/kWh, is equivalent to B+C+D mentioned above. (Any price outstripping the benchmark

needs a MEMR’s approval.)

92

・Note by E&T: The power selling price from PPU (SPC) to PLN, which is calculated by adding the

above-mentioned A to the benchmark, seems to become higher than 656Rp/kWh by the same margin as

the amount of A.

・AS for the case where output is sold from PPU to PLN, the MEMR is now preparing for mapping out

relevant regulations (perhaps in the form of MEMR ordinance). It appears Mr. Eric of the MEMR is

familiar with specifics of the preparatory works. As for the standard term of power purchase agreement,

a single-year basis is likely but the possibility of a longer term cannot be ruled out.

・As a condition to enable power purchase agreement from PPU (SPC) to PLN, it is necessary that “PLN is in

need of the output.”

B. Power output sold from PLN to ASC

・The benchmark tariff is 1,191 Rp/kWh (identical to the selling price to ordinary consumers).

・The benchmark price above can be lowered by B-to-B negotiations.

・It is fully possible for SPC to lease its generating capacity and the like to ASC and ASC, in the capacity of an

in-house power producer, operates the generating capacity to produce power for its own use. From the context

of the Electricity Act, this case is given the same treatments as those applied to in-house producers. Surplus

output, if any, can also be sold to PLN (for 656 Rp/kWh as the benchmark; a MEMR approval required when

outstripping the benchmark).

・WU, which is required for PPU, can be obtained in two months if well-negotiated unofficially beforehand with

the competent offices, such as the MEMW, PLN and local government (ex. Cilegon City Government).

Without a prior negotiation, WU acquisition can become more time-consuming.

② Backup services

A. “Firm interconnection” case:

・As an interconnection tariff (parallel fee) at least charged is a minimum charge equivalent to

40-hour-per-month in service.

・In case power-receiving capacity is 300MW, the minimum charge will be as follows:

・(300MW/0.85 (power factor) × (40 hrs./month) ×1,191Rp/kWh

＝ 1,680 mil. Rp/month ＝ 160 mil. ¥/month ＝ 1,960 mil. ¥/month

・In case power-receiving capacity is 150MW, the minimum charge turns to be 980 mil. ¥/month.

・Though not confirmed during the interview, when more power is received than covered by the minimum

charge (firm), it is thought that the extra portion over the minimum charge is charged with a meter-rate

system, that is, the extra power received (kWh) x 1,191 Rp/kWh.

・The meter-rate-based specific tariff during backups (and any case outpacing the aforementioned amount as

well) is calculated in the same manner as explained above, including the unit cost.

B. “Non-firm interconnection (interconnected-only-in-emergency” case:

・In this case, the so-called “temporary service” cost is charged for the backups offered. However, those

who want a temporary service must notify PLN a month beforehand.

・Accordingly, this case, though helpful in preset periodical inspections, is useless in dealing with such

unforeseeable events as abrupt mechanical troubles.

93

・The minimum charge applied to this case, which is equivalent to a-million-kWh in service with the unit

tariff set at 1,650 Rp/kWh, is calculated with the formula below:

・1,650 Rp/kWh ×0.8 (coefficient) × 1 mil. kWh/time

＝ 1,320 mil. Rp/time ＝ 12.83 mil. ¥/time

・The above is the minimum. When more power than a million kWh is received during backups, a

meter-rate-based specific tariff is charged as follows:

・Calculated below is an annual backup charge which is figured out on the assumption that a unit out of

300MW-generators (150MW x 2 units) would be put to a periodical inspection every 6 months, that is,

with a down time per unit amounting to 10 days/year × 24 hours/day＝240 hours/year, backups required

for the two units would amount to 480 hours/year ×150MW in total.

・1,650 Rp/kWh × 0.8(coefficient) × 480 hours/year ×150MW

＝ 95,000 mil. Rp/year ＝ 920 mil. ¥/year

・Compared with the annual minimum charge (980 mil. ¥/year) calculated for the aforementioned Case A

(firm interconnection) where the power received amounted to 150 MW, the annual charge for this

temporary service (920 mil. ¥/year) in Case B (non-firm interconnection) is found less expensive by about

60 million ¥/year.

③ Others

・Before having a new power resource interconnected with PLN’s grid, it is required to undergo PLN’s

assessment called KKO (an abbreviated Indonesian language which means ‘an assessment to learn if or not

operable enough. → Virtually it means a grid impact assessment).

・When making a KKO, PLN employs a system simulator named Dispatcher (which probably is a software)

based on which a grid impact assessment is made. To complete a KKO requires a month at least.

・When a third party, like SPC, offers distribution and retailing services to consumers in the capacity of PPU,

the both of IUPTL (standing for Ijin Usaha Penunjang Tenaga Listrik, or a permit for electric utility services

for public use required under the new Electricity Act）and WU (business area).

e) Cilegon City: Mining Energy Division, Cooperative Bureau for Commerce & Industry

・It appears fully possible for PPU (with WU and IUPTL as required) to offer supply services to the only one

consumer (on top of PLN) as its output taker.

・From the Cilegon City’s perspective, PPU which contributes to PLN’s grids in the form of inverse current is

much more preferable. Yet, regardless of PPU or in-house power producers, the City welcomes introduction

of generating capacities.

・As for WU required for PPU, Cilegon City is ready to issue a recommendation in 3~4 days if all the documents

required are well prepared. The documents include a FS report on the PPU’s power plant and a map (which

shows its location). These documents (FS report and map) are also required when applying for IO (Izin

Operasi: operation permit) of an in-house power producer (and PPU’s IUPTL as well).

94

Fig. 3- 2 An Example of FS Report Required When Applying for WU, IUPTL & IO Permits/Recommendation

Note) FS Report on Indrama Petrochemicals’ in-house power plant (40MW) located in Cilegon City

・The flow of WU acquisition is as follows:

① A recommendation to be gained from Cilegon City (one of necessary conditions for WU acquisition)

② The application forms and Cilegon City’s recommendation to be filed to the MEMR’s General Bureau of

Electricity.

③ PLN’s agreement to be gained.

Note) PLN’s agreement is thought to be a crucial requirement. In order to gain PLN’s agreement, unofficial prior negotiations are

essential. Meanwhile, as asserted by the PLN officer in charge of system planning, WU acquisition, which has been very

hard in the past, is becoming easier today.

・The retailing tariff from PPU (SPC) to consumers is settled in the flow described below (with neither

government’s nor PLN’s involvement at this stage).

① Negotiations between SPC (PPU) and consumers

② Consultation between SPC (PPU) and Cilegon City→Agreement→OK

Cilegon City does not care at all even if this PPU’s retailing tariff for its consumers is set much lower than

PLN’s prevailing retail tariff for general consumers.

95

4) Demand Outlook

a) Indonesia’s electricity supply-demand outlook

As illustrated below, Indonesia’s electricity demand is likely to surge sharply from 189 TWh in 2013 to 386

TWh in 2002, up 8.4% a year on average.

Fig. 3- 3 Indonesia’s Electricity Demand Outlook (GWh)

Sourece：PLN、Electricity Supply Business Plan 2013 - 2022、Executive Summary

As discussed in Chapter 1, to meet such ballooning electricity demand requires a total of 59.5 GW (59.5 million

kW) additional installed capacity to be constructed between 2013 through 2022, which means capacity

construction of about 6 GW (6 million kW)/year on average.

According to PLN’s electricity supply service plan 2013-2022, of a total of 59.5 GW aforementioned, a total of

16.9 GW (16.9 million kW) is projected to be installed by PLN. However, the remainder, or a total of 17.1 GW

(17.1 million kW), is not yet secured.

Such being the situation, the Indonesian government (Ministry of Energy and Mineral Resources) and PLN

alike are longing for construction of new/additional generating capacities by private power utilities (IPP and PPU)

as well as in-house power producers and expecting much for such capacity investments by foreign countries,

including Japan.

b) ASC’s electricity demand outlook

① Peak load outlook

ASC’s maximum power load currently stays at around 185,000 kW, which is projected to increase to 275,000

kW after caustic-soda and other manufacturing capacities are expanded.

② Electricity consumption outlook

ASC’s electricity consumption currently amounts to 185MW×8,200h/y＝1,517 GWh/year and is likely to jump

to 275MW×8,200h/y＝2,255GWh/year after the manufacturing capacity expansion.

96

3) Procurement of fuel

In the following, I examine the coal mine where it can supply it to in a target project.

a) General Descriptions of Indonesian Mines

It is already mentioned that CCoW and IUP mines are in operation in Indonesia. Table 9 shows coal output

from CCoW mines, comprised of three generations, and from state-run mines. As noted from Tab.3-, output by

state-run PTBA and CCoW mines, when combined, reached 70% of the whole. That is, the combined output of a

mere 50 mines outstrips total production from a few thousands IPU mines.

97

Tab.3-5 Output Trends by CCoW & State-run (PTBA) Mines 6

（千トン）

2005 2006 2007 2008 2009 2010 2011 2012

PTBA 8,606 9,292 8,555 10,099 10,830 11,919 12,389 13,728

Adaro Indonesia, PT 26,686 34,368 36,037 38,482 40,590 42,199 47,667 46,779

Allied Indo Coal, PT 169 51 85 72 0

Arutmin Indonesia, PT 16,757 16,234 15,394 15,735 19,298 20,426 22,832 27,379

Berau Coal, PT 9,197 10,533 11,811 13,052 14,336 17,383 19,444 20,999

Indominco Mandiri, PT 5,752 10,302 11,455 10,797 12,396 14,252 14,765 12,031

Kartim Prima Coal, PT 32,000 35,301 38,754 36,288 38,154 39,951 40,452 39,217

Kideco Jaya Agung, PT 18,217 18,900 20,541 21,900 24,692 29,049 31,395 34,649

Multi Harapan Utama, PT 2,060 1,074 1,080 1,872 1,528 1,832 1,311 1,174

Tanito Harum, PT 2,100 2,710 2,690 2,557 3,239 3,513 2,469 3,284

第1世代 112,938 129,473 137,847 140,755 154,233 168,605 180,335 185,512

Antang Gunung Meratus,PT 1,029 75 310 378 548 745 1,404 3,201

Bahari Cakrawala Sebuku, PT 3,000 3,495 3,382 3,531 1,982 1,104 1,509 636

Borneo Indobara, PT 496 871 1,219 1,182 1,118 2,754 3,650

Jorong Barutama Greston, PT 3,475 3,092 2,676 2,419 3,132 903 1,426 1,280

Kartika Selabumi Mining, PT 1,200 1,110 601 207 263 287 42

Mandiri Intiperkasa, PT 1,082 1,165 1,854 1,995 2,451 2,979 3,074 2,424

Marunda Graha Mineral, PT 829 1,367 1,452 1,446 932 1,341 963 670

Riau Bara Harum, PT 570 917 726 466 1,265 2,218 1,551 716

Trubaindo Coal Mining, PT 5,000 4,284 3,555 4,544 5,183 5,545 7,021 7,539

第2世代 16,185 16,001 15,427 16,205 16,675 16,216 19,989 20,158

Asmin Coalomdo Tuhup 216 1,740 2,857 2,521

Bangun Banua Persada Kalimantan, PT 138 276 346 254 605 942 911

Baramarta, PD 1,286 2,256 3,723 4,335 3,252 2,527 4,433 3,689

Bara Sentosa Lestari 4

Batu Alam Selaras PT 54 39

Baturona Admulya 280 525 1,021

Baramulti Suksessarana, PT 27 0

Dhama Puspita Mining 675 442 139 0

Firman Ketaun Perkasa. PT 23 311 494 1,265 2,496

Guning Bayan Prartama Coal PT 4,300 5,156 4,532 3,459 4,142 4,053 3,458 3,776

Insani Bara Perkasa, PT 350 88 178 772 1,007 2,249 4,222 4,421

Intitirta Perima Sakti, PT 0

Indexim Coalindo 122

Interex Sacra Raya, PT 196 158 112 93 85

Kadya Caraka Mulia, PT 167 434 335 239 121 46 228 255

Kalimantan Energi Lestari. PT 600 127 66 13

Lianggan Cemerlang, PT

Lana Harita Indonesia, PT 5,752 1,685 1,480 1,302 1,397 1,977 2,239 2,861

Mahakam Sumber Jaya, PT 2,304 2,926 2,936 3,058 4,537 5,303 7,983 9,250

Multi Tambang Jaya Utama. PT 90 357 641 449

Nusantara Temal coal, PT 208 930 2,264 920 1,446 1,118 718

Perkasa Inakerta, PT 523 1,144 2,012 2,685 3,129 2,226

Pesona Khatulistiwa Nusantara PT 56 712 1,300 1,217

Pendopo Energi Batubara PT 440 6 5

Sumber Kurnia Buana, PT 1,298 1,341 1,526 1,018 1,305 720 908 502

Santan Batubara PT 1,249 1,992 1,725 2,400

Senamas Energindo Mulia PT 18 49

Singulurus Pratama Coal PT 478 1,095 1,748 1,706

Tanjung Alam Jaya, PT 1,587 1,466 1,465 1,654 1,028 958 811 785

Teguh Sinar Abadi, PT 209 1,021 1,092 1,290 927

Wahana Baratama Mining, PT 772 2,887 2,574 4,234 3,627

第3世代 18,346 16,463 18,267 20,810 27,101 33,377 44,913 45,436

コントラクター計 147,469 161,937 171,541 177,770 198,009 218,198 245,237 251,106

KPとIUP、その他 9,518 25,310 36,834 52,363 45,615 45,052 95,645 121,065

計 165,593 196,539 216,930 240,232 254,454 275,169 353,271 385,899

Source: Mineral Resources Directorate General issued mineral resources statistics

6 Total output, put at 380 million tons in Tab.3- based on as old statistics as a year earlier, exceeded 420 million tons in FY2013 and

is projected to increase further in FY2014. According to Reuter’s prompt report, Indonesia’s coal output in the first half of FY2014

is projected at 213 million tons/6 months, up 6.8% over a year ago.

First generation

Second generation

Third generation

(1,000 ton)

KP，IUP，other IUP

Constructer Total

Total IUP

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b) Selection of Mines as Potential Suppliers

When building a power plant, it is first determined using which coal with what calorific value is advantageous

in a given construction site and, then, matching efforts are made between coal specifications and

generating-capacity size. So two cases below are considered here in consideration of stable supply possibility in

the mid-and-long term:

Case 1: When coals with a calorific value of 5,000 kcal/kg is in use as generally used at PLN’ power plants

Case 2: : When coals with a calorific value of 4,200 kcal/kg becoming mainstream is in use

①Case 1

In Indonesia electricity has been generated for years by using coals of 5,000 kcal/kg in calorific value.

Accordingly, thanks to all relevant facilities of which performance and durability has been proved,

facilities-related troubles should hardly occur. Also, coals of this rank can easily be secured at this stage today.

In case coal specs have already been specified, it might be possible to unroll the next works of originally

selecting coal brands. But, this time, it is decided to research on-going situations of a nearby power plant

running on 5,000 kcal/kg-coals, with resultant information of coals in use stated in this report.

It is because of a judgment that research results can not only show the most stable way of securing coals but

also identify the cheapest coal brands for the planned power plant if built with similar specs.

＜Information about Sulalaya Power Plant＞

Fig.3-4 General Descriptions of Sulalaya Power Plant（photo）

Source: Indonesian Power

PLN has a subsidiary named Indonesian Power Co. This company possesses and runs a power plant in a

coast area northwest of Java. Stated below are the information gained from the company’s Sulalaya power

plant.

Tab.3-6 General Descriptions of Sulalaya Power Plant

Specs Calorific value of coal use GAR

Unit volume 7 1～4Unit：400MW ， 5～７Unit：600MW 5,000kcal/kg

Unit volume 1 8Unit：600MW 4,200kcal/kg


99

Boiler model: Semi-critical-pressure natural-circulation boilers (Nos. 1~7: Canada, No. 8: China).

Environmental equipment: Electric dust collectors alone (without de-sulfurization, de-nitrification). Heat

reuse of 150℃-flue gas currently under consideration

PLN consumes 16 million tons/year (procured) of coals, out of which 11 million tons/year procured by

Indonesian Power. As its manner of procurement, the company is committing to open tender. The

successful tender price last time was CIF US$65～66/t.

Indonesian Power’s coal procurement contracts consist of long-term (10 years) and mid-term (3 years)

ones, with the prices settled anew every year. Coal brands covered by the long-term contracts include 4

million tons/year from the state-run mine PTBA, 2 million tons/year from private mines run by Berau, and

a million tons/year from private Adaro mines. The remaining 3~4 million tons/year are covered by the

three-year contracts.

Coal procurement sources are shown in Tab.3-. While coals with 5,000kcal/kg in calorific value are

currently in use, the Unit No. 8 plans to use low-rank coals in the days ahead. It is because shrinking

availability of high-rank coals is likely.

Tab.3-7 A List of Indonesia Power’s Coal Procurement Sources


Required qualities are:

CV4,800～5,000(GAR) → Reversely speaking, no need for qualities over GAR 5,000.

・ Ash Max 5%

・ Sul Max 0.4% → Most crucial due to plant location near residential area.

・ HGI 47～55（Max 62） → High HGI can cause clogging.

・ Max 62 is maximum mill load value.

・ AFT(IT) Min 1,180℃

（Among other quality-related items requested to the mines are summarized in Tab.3-）

Coal mine Use coal amount

t/year

calorific value

(Kcal/Kg) GAR Ratio（％）

PT. Bukit Asam （PTBA） 5,000,000 5,000 41.92%

PT. Berau Coal 1,500,000 5,000 12.58%

PT. Kideco Jaya Agung 1,000,000 4,900 8.38%

PT. Adaro 1,500,000 5,000 12.58%

PT. Cenko 480,000 5,000 4.02%

PT. Oktasan Baruna Persada 480,000 5,000 4.02%

PT. Natuna Energi Indonesia 480,000 5,000 4.02%

PT Pln Batubara 1,200,000 5,000 10.06%

Spot 288,000 5,000 2.41%

Total (annual quantity) 11,928,000 100.00%

100

Tab.3-8 A List of Requests Made to Mines

quality-related items spec

- Gross Calorific Value kcal/kg(as received) <5.000 Kcal/kg

- Hargrove Grindability Index > 48

- Total Moisture (as received) < 28 %

- Ash Content (as received) < 5 %

- Sulphur Content (as received) < 0.4 %

- Ash Fusion Temp. (Initial Deformation) > 1.150 °C

- Nitrogen (as Received) > 1 %

- Slagging Index karakteristik Ash bituminous < Medium

- Slagging & Fouling Index karakteristik Ash Lignitic < Medium

Size

Ø 98 % 70 mmUnder < 50mm

Ø 10 % 2.38 mmOver < 2.38 mm


Port unloading facilities are summarized in Tab.3-

Tab.3-9 Port Unloading Facilities

Pier Use Length

(m)

Draft

m

(m)

Facility

Jetty 1 Self Unloading Vessel 160 11.5 Conveyor 2×2000t/hr

Jetty 2 General Vessel 330 14.5 Conveyor 2×3500t/hr

SPOJ 1 Coal Barge 160 9 Conveyor 1×1000t/hr

SPOJ 2 Coal Barge Extraordin

ary pier

Bulldozers, etc.


Other information

・ New President Jokowi decides to perform power development 35,000MW within 5 years, and has

published the additional power plants using coal-fired main. (Coal-fired power was adopted because

of its outstanding economics and price competitiveness.)

Gov. (PLN) 15,000M

IPP 20,000M

Total 30,000M

・ Sulalaya power plant is not equipped with coal-blending units, and blending works are done by coal

suppliers.

・ New-brand combustibility tests are outsourced to a third-party testing firm (Interteck), while JT

Boyd is employed for making research on mines (reserve evaluation)

101

Of the coal suppliers from which Indonesia Power purchases coals, the top four consist of a state-run firm and

CCoW mines. The state-run mine, or PT. Bukit Asam (known as PTBA) is situated in the province of South

Sumatra, and its coals are hauled by rail from the province to the southernmost point of Sumatra, then forwarded

by vessel to end users at home and abroad. It is because PTBA is state-run why PLN is taking coals largely from

PTBA. PT. Adaro, located in South Kalimantan, is the largest mine in output terms. Also, PT. Berau Coal is

located in North Kalimantan. They both are giant mines listed in Tab.3-.

In selecting coals to fuel Anyer coal-fired power plant, the purchase sources of Sulalaya power plant provide

useful references. Particularly, as long as buying from major CCoW mines (PT. Adaro, PT. Berau Coal, Kideco

Jaya Agung) a supply disruption is unlikely. On top of PT mines, Fig.3- shows locations of PT. Aruthomin.

However, PT. Bukit Asam (PTBA), the state-run mine, is omitted. It is because PTBA, responsible for supplying

to domestic power plants, is thought to be harnessed by tight production-supply.

Fig.3-5 Transport Routes to Sulalaya Power Plant

Source： Study Team based on JCOAL provide materials and information

Tab.3- contains data sheets on individual mines. Table 16 is designed to be used in selecting potential mines

as suppliers to Anyer power station. Shown in the upper columns are 7 mines by coal brand, each featuring a

calorific value of 5,000kcal/kg (GAR). Of them, the more reliable mines from stable supply aspect, which can

be main sources, are listed the more topside in the table, while candidate mines as spot sources are put bottom side.

In regard to their proven coal reserves, it is clearly noted that all of these mines cause few problems to the

operation of Anyer power plant. CIF prices in the table are calculated by adding to HPB price the costs incurring

in transportation to vessels. Because HPB price represents FOB price at river mouth, the transport cost from

mine to Java needs to be added. In reference to Tab.1-16 and Fig.3-, this can be described with the formula

102

below (in case of a 2,100km-long transportation).

US0.005＄/t・km × 2 ,100 km＝US10.5＄/t

2100km＝Distance from Sulalaya plant to PT.Berau Coal

Meanwhile, Fig.3- shows where these mines are located. Locations of the mines to be explained in Case 2 are

illustrated as well.

②Case 2

For Indonesia using low-rank coals is a crucial challenge toward the days ahead in a sense that shifts from

depleting bituminous-subbituminous coals are critical. PLN, in recent years, has been taking 4,200kcal/kg-coals

as low-rank coals for power generation. It is because 4,200kcal/kg is specified in the specification furnished to

IPP operators in Sumatra.7,8

There will be the descent from that coal use becomes mainstream 4,200kcal/kg class

in future so that this example shows it. It is expected that the new coal mine development of the 4,200kcal/kg

class advances in future from such a background, and it is thought that it is easy to get security of the supply that,

therefore, is stable about the coal of the class in the mid-and-long term。 The mines where coals of

4,200kcal/kg in calorific value were extracted are shown in the lower columns of Tab.3-.9 The contents are the

same as in Case 1. It is noted some of the major mines extracted in Case 1 are also selling low-rank coals.

However, in regard to prices, few are stated in HPB price terms, from which it is judged that traded amounts are

much limited than 5,000cal/kg-coals.

Just like the case of 5,000kcal/kg-coals, stable plant operation is assured if the main fuel is bought from major

mines and, therefore, it is recommended as a basic policy to choose coal brands from the mines located within

1,000km and run by such miners as Adaro and Arutmin, while inputting inexpensive spot coals bit by bit.

Few coal brands of 4,200kcal/kg in calorific value are currently supplied to the market. But, because

4,200kcal/kg-coals are the coals of which use is set to be backed by all-Indonesian supports, including the

Ministry of Energy and Mineral Resources, the likelihood is that an increasing number of brands will become

available, thus offering richer options.

7 All the coal-fired power plants of which development have been under way under the responsibility of PLN within the framework

of the First CRASH Program (PLN’s captive power plant construction plan puts its total generated output at 10,000MW to be built by

2009, but the capacity completed under the plan remains at about 5,300MW as of 2014) are required to use low-rank coals of under

4,500 kcal/kg in calorific value. 8 No. 8 Unit at Sulalaya Power Plant, taken up in Chapter 3 (3) 5) “Case Study – Information of Sulalaya Power Plant,” was also

installed under the above-mentioned plan. (Meanwhile, the No.8 Unit, a China-made generating capacity of sub-critical type, is

reportedly suffering frequent ill-functions.) 9 Extracted from JCOAL’s data on coal mines.

103

Tab.3-10 Fact sheet according to the coal mine brand according to the calorific value


HPBBarge to

PlantTotal

Calorific V

cal/g(GAR)

Calorific V

cal/g(AD)T,Moisture % I,Moisture %

Total

Ash %

Volatile

Matter %

Total Sul. %

(ADB)

Hardgrove

Index

(HGI)

Ash Fusion

Temp. Measured Indicated Inferred Proven Probable Possible

Adaro Indnonesia E5000 52.65 5 57.65 35,800 16-Nov-32 CCoW 5100 5900 26 14.5 1.5 43 0.15 50 47.2

Arutmin Indonesia Arutmin 5000 49.97 5.5 55.47 70,153 2-Nov-32 CCoW 4,750 5,300 18 11 4 35 0.2 45 1100 518 720 1248 277 189 20

Berau Coal Sungkai 48.13 10.5 58.63 118,400 26-Apr-33 PKP2B 5,000 5,500 26 18 5.5 38 0.9 47 1050 21

PT.Bukit Asam BA59 55 0.5 55.5 66,080 2-Mar-31 Government Cost Us＄/t 5900 28 13.1 6 40.4 0.6 13.5

Kideco Jaya Agung Rota North 54.36 7.5 61.86 50,400 14-Sep-32 CCoW 4870 24.9 3.1 0.11 221 760 395 192 459 25

Kuansing Inti Makmur 55 4 59 2,809 1-Jan-24 IUP 4800-5100 5600-6000 24-27 13 15-17 1-1.2 147.1 70.1 44.1 61.4 18.2 N/A

Lanna Harita Inonesia Value A 54.2 8 62.2 21,270 19-Feb-48 CCoW 5000 20-22 18 5-6 0.6-1.5 200.83 413.58 18.31 23.47 N/A

HPBBarge to

PlantTotal

Calorific V

cal/g(GAR)

Calorific V

cal/g(AD)T,Moisture % I,Moisture %

Total

Ash %

Volatile

Matter %

Total Sul. %

(ADB)

Hardgrove

Index

(HGI)

Ash Fusion

Temp. Measured Indicated Inferred Proven Probable Possible

Adaro Indnonesia E4000 30 5 35 35,800 16-Nov-32 CCoW 4000 4850 40 27 2 37 0.15 60 47.2

Arutmin Indonesia ECOCOAL 26 5 31 70,153 2-Nov-32 CCoW 3,859 4,793 32 16 4 35 0.2 50 1100 518 720 1248 277 189 20

PT.Bukit Asam (PTBA) IPC53 32 0.5 32.5 66,080 2-Mar-31 Government 4115 5300 34 15 8 39 0.5 13.5

Energi Batubara Lestari Original EBL Coal 32 5 37 1,894 1-Jun-36 IUP 4313 5300-5400 30-35 14-18 1-3 42 0.06-0.15 44-45 3.6

Gorby Putra Utama 30 2.8 32.8 4,395 23-May-48 IUP 4017 5413 36.6 14.56 6.58 0.42 55.2 16.7 64.4 41.4 2 Under Construction

Lanna Harita Inonesia Value C 32 8 40 21,270 19-Feb-48 CCoW 4200 35-38 18 5-6 40 0.6-1.5 1160 200.83 413.58 18.31 23.47 N/A

Tunas inti Abadi TIA5300 26 5.5 31.5 3,074 16-Mar-25 IUP 3960 5370 37.4 15.1 5.7 0.15 32 39 35 13 32 Under Construction

CV(GAR)=(100-TotalMoisture)/(100-InharentMoisture)×CV(ADB) HPB = FOB/Vessel Barge to Plant = 0.005 US＄/t・km ×Distance

Main

Sub

Cost Us＄/t

Cost Us＄/t

2455

7295 1377

7295 1733

60

305

Resources(Mt) Reserves(Mt)

1675

Resources(Mt)

Production (Mt/year)

Candidate Coal Mine for Power Plant (4200kcal/kg:GAR)

Coal Mine BrandArea

(ha)

Validity of

License

Reserves(Mt)

556

License Type

Quality

Rank

Main

Rank

Coal Mine BrandValidity of

LicenseLicense Type

Quality

Candidate Coal Mine for Power Plant (5000kcal/kg :GAR)

Production (Mt/year)

1291 476

Area

(ha)

104

Fig.3-6 Locations of Candidate Mines for Anyer Power Station


Kalimantan

Java

Sumatra

■Bituminous coal ―Sub-bituminous coal ■Lignite

105

(4) General Descriptions of the Project Plan

1) Basic policy applied when determining project’s contents

When FS works were proposed on the formation of this project, etc., the technology model and output assumed

for the project were USC and 600,000kW in reference to coal-fired power plants currently in operation in Japan,

which includes Unit No. 5 (600,000kW; USC; bituminous coal-fired; main vapor temperature set at 600℃;

commissioned in July 2004) and Unit No. 6 (600,000kW; USC; bituminous coal-fired; commissioned in

December 2013) at Hirono Plant run by Tokyo Electric Power Co. (TEPCO).

As for coal ranks, assumed at the onset were a wide range of coal ranks, including Indonesia’s

indigenously-produced bituminous and subbituminous coals and overseas ones.

In the subsequent research process, through such efforts as literature studies and interviews made to JCOAL

and others, it was found that Indonesia’s energy policy positioned bituminous coals chiefly as exportable goods

and attached the importance to subbituminous coals for domestic use. In price terms, the use of subbituminous

coals was found reasonable as well.

Also, from the interview survey made to PLN last November, a suggestion was gained that a designed output of

USC, if fired by Indonesian subbituminous coals, needs to be more than 800,000 kW at least.

On top of it, literature survey results showed that, concerning USC fired by Indonesian subbituminous coals,

there were plans for building a plant of over a million kW in terms of single-unit capacity, but plans for a

single-unit capacity construction of under a million kW were completely absent (→See the References below.)

Also, hearing from the Japanes experts and referring technical literature, we found that when using the juicy

Indonesian sub-bituminous coal, since the corrosion of the material is likely to proceed at high temperature and

high pressure, requires expensive materials to prevent corrosion, scale output scale of one million kW (1,000

MW) class is necessary.

From these results, it is found that a 600,000-kW USC running on Indonesian subbituminous coals is thought

not impractical at all in technical terms. Yet, without any records of actual operation nor planning, USC of over

600,000 kW is filled with unknown risks as a proven unit, which intensifies its character as a demonstration unit.

Consequently, with the use of Indonesian subbituminous coals premised, the FS was newly designed to cover

not only USC (Ultra Super Critical) but also other types, including SC (Super Critical), Sub-C (Sub-Critical) and

CFB (Circulating Fluidized Bed).

106

(Reference 1) Definitions and Others of Available Technologies Incl. USC and SC

Tab. 3- 11 Definitions and Remarks of USC, SC and Sub-C

Technology Definitions/Remarks

Ultra Super Critical (USC) Technology of super-critical (SC) type of which main vapor temperature exceed 566℃.

To be built in large capacity and not practical in small one.

Super Critical (SC) Technology with vapor pressure of over 22.1MPa and main vapor temperature of over

566℃. Depending on design, thermal efficiency as good as USC can be gained.

Sub-Critical (Sub-C)

Technology with vapor pressure of under 22.1MPa. Drum-type boiler model. Large

power plants employ USC and SC featuring good thermal efficiency, while Sub-C is

popularly in use in small plants.

Source: The Ministry of Environment, On-going Commercialization and Development Efforts of the State-of-Art

Generating Technologies “BAT Reference Table” (As of April 2014)

(Reference 2) Actual Records & Plans of Coal-fired Power Plants of USC Type in Japan (Examples)

Tab. 3- 12 Actual Records & Plans of Japan’s Coal-fired Power Plants of USC Type (Examples)

Operator Plant Unit No. Stage Commissioned in Output

TEPCO Hirono Unit No.5 Running July 2004 600,000 kW

Unit No.6 Running December 2013 600,000 kW

Chubu Electric

Power Hekinan

Unit No.3 Running April 1993 700,000 kW

Unit No.4 Running November 2001 a million kW

Unit No.5 Running November 2002 a million kW

Electric Power

Development Co. Isogo

New Unit

No.1 Running April 2002 600,000 kW

New Unit

No.2 Running July 2009

562,000 kW

(provisional)

Electric Power

Development Co.

Takehara New Unit

No.1 Abuilding Sept., 2020 (slated) 600,000 kW

Takasago

New Unit

No.1

Planning

(Assessment) 2021(planned) 600,000 kW

New Unit

No.2

Planning

(Assessment) 2027 (planned) 600,000 kW

Hitachinaka

Generation Hitachinaka －

Planning

(Assessment) Around 2021 (planned) 650,000 kW

Kashima Power Kashima Unit No.2 Planning

(Assessment) Around 2020 (planned) 650,000 kW

Note) All of USC units in Japan, those currently running and planned alike, are thought to be designed for using bituminous

coals.

Source: Prepared by E&T from various materials.

107

(Reference 3)

Indonesia’s Introduction of Coal-fired Power Plants of USC Type and Coal Ranks in Use: Actual Records & Plans

① Introduction records

So far no USC units have been introduced yet.

② Introduction plans

Shown in the table below are the plans to introduce USC units, each designed to be a million kW in

single-unit-capacity terms.

Tab. 3- 13 Indonesia’s Plans for USC Introduction

Plant Name Output Location On stream Coal Rank in

Use

Utility

Type Operator Remarks

Batan

2 mil.

kW

(1 mil.

kW ×2)

Batan Province,

Central Java(226

ha)

Unit No.1:

around

2016

yearend（※）

Unit No. 2:

around

mid-2017

（※）

Subbituminous

coals (from

Indonesian

mines)

IPP

BPI (Bisemana

Power

Indonesia); a

joint venture

invested by

EPDC, Adaro

Power and

Itochu, Inc.

※Due to

residents’

opposition,

delays are

likely in

starting

plant

operation

Indramaju 1 mil.

kW

Indramaju, West

Java Province

March

2019

Under exam.

(Indonesian

low-rank coals

very likely)

Fed to

PLN’s

grids

PLN

An ODA

project (yen

loan

provided)


In addition to those cited above, PLN now puts Jawa-1、Jawa-4、Jawa-5、Jawa-6, shown below, under

consideration. While their details are not available, all of these under consideration are planned to be of USC

type of a million kW in a-single-unit-capacity terms. -

108

Fig. 3- 7 USC/SC Power Plants Planned or Under Consideration by PLN (incl. IPPs)

Source: I Made Ro Sakya (PLN), Current Status and Future Development of Coal Thermal Power Plant in

Indonesia (2013.9)

Fig. 3- 8 Indonesia’s Roadmap of Clean Coal Technology (CCT)

Source: I Made Ro Sakya (PLN), Current Status and Future Development of Coal Thermal Power Plant in

Indonesia (2013.9)

Original Source: JICA CCT Study, October 2012, with updated projects and schedule by PLN

109

(Reference 4)

Indonesia’s Introduction of Coal-fired Power Plants of SC Type and Coal Ranks in Use:

Actual Records & Plans

① Introduction records

Tab. 3- 14 Indonesia’s Records of SC (Super Critical) Introduction

Plant Name Output Location On stream Coals in use Utility

type Operator Remarks

Paiton III

(additional

installed

capacity)

815,000

kW Paiton March 2012

Subbitumin

ous coals IPP

Paiton Energy:

Invested by TEPCO,

Mitsui & Co.,

International Power

Co. and Batu Hitamu

Berukasa

Indonesia’s first

SC plant(made

by Mitsubishi

Heavy

Industries)

Chirebon 660,000

kW

West

Chirebon

District,

Java

July 2012

Heat value

5,000kcal/k

g

(estimated)

IPP

Cirebon Electric

Power: Invested by

Marubeni and others.

Indonesia’s

second SC plant

Cilacap

Baru/Adipal

a

660,000

kW

Adipala,

Central

Java

2014 (slated)

Heat value

5,500kcal/k

g

Fed into

PLN’s

grids

China National

Technical Import and

Export Corporation

Indonesia’s

third SC plant


② Introduction plans

Specific plans for introducing coal-fired power plant of SC type are not disclosed. Judging from its capacity,

Banten Plant (625MW, to be put on stream in 2016) shown in the chart above can be of SC (super critical) type,

though its details are not available.

Meanwhile, in its Power Supply Service Plan 2012-2021, PLN puts that “power plant candidates now under

consideration for the Java-Bali System Development Plan are a 1,000MW-class coal-fired plant of USC type, a

600MW coal-fired plant of SC type, a 750MW natural gas-fired plant, and a 200MW oil-gas combined power

plant and a 250MW pumping-up plant, with the latter two designed for meeting peak demand.

110

2) Contents of the proposed project

a) Appraisal bases/preconditions

With this FS works (on project formation and others), the appraisal bases/preconditions tabulated below are

preset, based on which the most optimal types of utility and technology as of now, to be identified while taking a

host of restraints into consideration, are proposed.

Tab. 3- 15 Appraisal Bases/Preconditions

Appraisal Bases Explanations

Degree of importance

For Indonesian

public interest

For

AGC/ASC

How helpful in easing

Indonesia’s power supply &

demand

・The greater inverse current to PLN makes the

higher contribution. ◎ △

SPC’s benefits (profits, etc.) ・The higher SPC’s profitability leads to the higher

investment values and returns. ○ ○

ASC’s benefits (economics, etc.)

・With management already squeezed by sharply

raised electricity tariffs for large industrial

customers, power cost cuts is a matter of top

priority.

○ ◎

Use of Japan’s official finance

・In line with Japan’s “Projects to Help Promote

Infrastructure/Systems of Energy

Supply-Demand Mitigation Type,” to put Japan’s

official finance, notably JBIC’s, to the best use is

essential.

◎ ○

Use of outstanding

technologies/know-hows owned

by Japanese firms

・In line with Japan’s “Projects to Help Promote

Infrastructure/Systems of Energy

Supply-Demand Mitigation Type,” to put Japan’s

technologies/know-hows, in both hardware &

software facets, to the best use is desirable.

◎ △

Symbol that describes the "importance" column of the table above is one in which the study team was given by

the basis of the following.

A. How helpful in easing Indonesia’s power supply & demand

① Importance to Indonesia of public interest:

· "Energy supply and demand relaxation type infrastructure system dissemination promotion Business", has been

one of the aims "to contribute to the relaxation of the world's energy supply and demand, to achieve a secure

stable supply of energy to our country."

111

And mitigation of power supply and demand in Indonesia is a very urgent issue for Indonesia suffering from

power shortages, that contribute to Indonesia of public interest, not waiting for the word.

② Importance to AGC / ASC:

• The Indonesian power supply and demand is easing, it leads to management stabilization and rising cost

suppression of Indonesia domestic relations companies and suppliers that do not have their own power plants,

thus leading to management stabilization of AGC / ASC.

B. SPC’s benefits (profits, etc.)


· If SPC benefit (income, etc.) translates into higher yields, make the investments to improve the return and

profitability of Indonesian institutions, also contribute to the expansion of tax revenue and employment.


· If SPC benefit (income, etc.) translates into higher yields, the management of the power generation business

stabilized by PPU, to contribute to the stabilization of power long-term stable supply and electricity charges of.

C. ASC benefit of (economic, etc.)


・ Thousand beneficiaries of ASC to hire a scale (profitability, etc.) An increase, stabilization and expansion of

local employment, which leads to the expansion of tax revenue of local government.


• The ASC benefit (income, etc.) that is growing is important for AGC / ASC does not wait the word.

D. Use of Japan’s official finance


・ Japan of public finance that is utilized is consistent to the Indonesian government's policy to welcome the spirit

of the "energy supply and demand relaxation type infrastructure system dissemination promotion business",

and the introduction of foreign capital to the power development.


· Take the AGC / ASC, and if it is possible to receive a low-interest loan from JBIC, a large economic benefits.

E. Use of outstanding technologies/know-hows owned by Japanese firms


· Japanese companies that are doing a power development by leveraging the superior technology and know-how

possessed by, short term as well as to contribute to Indonesia's power supply and demand relief, long-term

supply capacity through the high-quality hardware and O & M leads to the maintenance of, and also lead to

technology transfer to Indonesia of these technologies and know-how.


· For the AGC / ASC, cost and quality surface from a global point of view is also optimal procurement important,

including, not necessarily take advantage of the best solutions of technology and know-how of Japanese

companies.

112

As noted from the table above, the degree of importance judged from the perspectives of Indonesian public

interest naturally differs from the degree of importance determined from the perspectives of the host firms for the

proposed project (AGC/ASC).

With this FS works, the importance for Indonesia public interest is taken as a matter of vital significance. Yet,

given the current situations where the host firms for the planned project are hit seriously by Indonesia’s surging

electricity tariffs, it is believed that solving the power cost problem swiftly in efficient and effective manners can

also contribute to Japan’s industrial policy (= to strengthen international competitiveness of the Japanese

manufacturing industry and smoothen global evolution). Hence, by attaching a great importance to ASC’s

benefits (particularly economics) as well, this FS works are designed to offer a well-balanced solution (in terms of

utility and technology types) from the all-embracing aspect.

b) Business model

Concerning business model for the proposed project, it was planned at the onset that, in the capacity of IPP,

output equivalent to 300,000kW out of a total of 600,000kW generated should be supplied to ASC’s local plant,

with the remaining 300,000kW sold to PLN.

However, later, when an interview survey was made to the Ministry of Energy and Mineral Resources (MEMR),

it became evident that IPP was required to sell the whole output to PLN without exception, thereby there was no

choice but to scrap the IPP model.

Instead, the MEMR’s information provided during the interview suggested a possibility to adopt a business

model featuring PPU (Private Power Utility), the third electric utility form (after PLN and IPP) endorsed under the

New Electricity Act.

PPU, a kind of electric power supplier falling in Article 9-a (power supply services for public use), is private

entrants into the public-use power supply sector served chiefly by PLN.

This PPU model, if employed, would enable ASC to receive power supply from a third party, including SPC,

which is engaged in retailing at one hand and, at the other, allows power producers, like SPC, to sell part or whole

of their generated output to PLN.

Also available is a buy-back system, which enables a power producer once selling the whole output to PLN to

buy back part of output from PLN. In case part of output is sold, the selling price applicable to the SPC→PLN

trading is settled by B-to-B negotiations, while the selling price applicable to the SPC→ASC trading is also

settled by B-to-B negotiations, but, must be approved by the local government.

In the meantime, when a third party, like SPC, intends in the capacity of PPU to offer distribution and power

retailing services to a consumer (ASC), WU acquisition is required under Article 10 (3)~(5) of the New Electricity

Act. (WU stands for Wilayah (area) and Usaha (business) = Business Area). If well-negotiated with the

MEMR, PLN and the local government (Cilegon City) unofficially beforehand, WU can be acquired in two

months at the shortest.

Based on the above, the most promising business model is as follows:

113

① Type of utility: PPU（Public Power Utility）

・Statutory basis: New Electricity Act (Article 9-a, among others)

② Power producer: SPC

・Part of generated output is retailed from SPC to ASC via distribution lines within its plant site.

・In parallel, part of generated output is sold from SPC to PLN.

・Ratio of AGC/ASC capital contribution: Under consideration

(AGC/ASC is recommended to make capital contribution to a degree as significant as allowing them to

have an influence on SPC management, which is thought desirable.)

・Capital contribution by other firms: Under consideration

・JBIC’s project finance: Interview-survey results show that the project finance can be gained if the

following conditions are met:

・Investment of which chief objective is not earning investment returns merely but starting business in specific forms.

・Essentially O&M of power plant must be awarded to Japanese firms (ASC or O&M-outsourced firm).

・It is desirable that many Japanese firms’ technologies are involved. Yet, plant equipment, including generator, need

not necessarily be Japan-made and foreign-made are acceptable.

・On capital contribution ratio in the host entity for power plant operation, Japanese firms should hold more than 30%

of the whole stake.

・On management of business operation (including decision-making), Japanese firms should be involved positively

and continuously in the long run, typically for 30 years.

・Good profitability of SPC and others also poses a crucial factor.

・Off-taker (= power purchaser) should purchase power constantly over a long period. The principal business of

power consumer should be sustainable in the long run, typically over 30 years.

c) Technology

Originally USC/600,000kW was assumed as a recommended technology system. But, as a result of

aforementioned particulars, the use of Indonesian subbituminous coals was taken as an essential precondition and,

accordingly, the FS works were made by examining not merely USC (Ultra Super Critical) but also SC (Super

Critical), Sub-C (Sub-Critical) and CFB (Circulating Fluidized Bed) as technology candidates.

The model that was considered most promising is shown below.

① Scale (generated output & retailing/power-selling capacities)

・Generated output: 450,000/600,000 kW

・Retailed from PPU (SPC) to ASC: 300,000 kW

・Power sold from PPU(SPC) to PLN: 150,000/300,000 kW

114

Fig. 3- 9 Power System Configuration

ASCPower LoadG

PLN Grid : 150kV

Normal Operation

SW：ON SW：OFF

SW：ON SW：ON

ASCPower LoadG

PLN Grid : 150kV

During periodic inspectionand emergency

SW：OFF SW：ON

SW：OFF SW：ON

Backup

PPU PPU

275MW

150／300MW

275MW

450／600MW

② Technology types

USC (Ultra Super Critical), SC (Super Critical), Sub-C (Sub-Critical) and CFB (Circulating Fluidized Bed)

have such features as tabulated below.

Tab. 3- 16 Characteristcs of each technology

Type

Output of a practical single unit Acceptability of coal

ranks Japanese manufacturers

Gross thermal

efficiency (HHV) Bituminous coals

in use

Subbituminous

coals in use

USC (Ultra Super

Critical) 600,000 kW～ 800,000 kW～

Bituminous and

subbituminous coals

alike acceptable, but

the latter increases

lower limit of

output.

MHPS (Mitsubishi

Heavy

Industries/Hitachi),

Toshiba, IHI

Japan: 900,000～a

mil. kW: 43% 、

700,000 kW:

42.5% 、 600,000

kW: 42%

SC (Super Critical)

500,000 kW～ 600,000 kW～

Bituminous and

subbituminous coals

alike acceptable, but

the latter increases

lower limit of

output.

MHPS(Mitsubishi

Heavy

Industries/Hitachi),

Toshiba, IHI; Cost

competitions likely with

overseas makers

(particularly Chinese)

Japan: 500,000

kW: 42.5%（HHV）

115

Type

Output of a practical single unit Acceptability of coal

ranks Japanese manufacturers

Gross thermal

efficiency (HHV) Bituminous coals

in use

Subbituminous

coals in use

Sub-C (Sub-Critical)

Over 200,000 kW

is popular.

Popularly over

200,000kW

Both bituminous and

subbituminous coals

acceptable

IHI is outstanding in

both technology and

cost. Among others,

various makers including

overseas ones

Japan: 200,000

kW：41%

CFB (Circular

Fluidized Bed)

150,000kW, etc.

for IPPs;

15,000~70,000kW

for in-house

power producers

Same as left.

A wide range of

rank coals

acceptable

Sumitomo Heavy

Industries is outstanding

in technology terms.

With cost included,

overseas makers, notably

Taiwanese, can be

candidates。

(Under study)

(Remarks)

・In case USC is employed, the lower limit of output from a proven unit (currently in operation), if fueled by

Indonesian subbituminous coals, stands at around 800,000 kW (Note: Indonesia’s plans suppose a single-unit

capacity of a million kW alone). Accordingly, a USC unit of 600,000 kW planned for this project cannot be

a proven level but a demonstration stage.

・In case of SC, a single-unit capacity of 600,000 kW is practical when fueled by Indonesian subbituminous

coals. However, cost competitions are likely with overseas manufacturers, notably Chinese makers.

・In case of Sub-C and CFB, 400,000~600,000 kW is practical with Indonesian subbituminous coals in use.

With these features taken into consideration, combined with the aforementioned appraisal bases, the FS works

undertaken this time puts forth the technologies and their specifications that are considered most optimal from

overall aspects.

The technologies and their basic specifications, which are reckoned most promising, are stated below.

【Case 1】

・Technology: SC (Super Critical)

・In general, the main steam temperature of supercritical (SC) is 566 ℃ or less, and the main steam

temperature of ultra-supercritical (USC) over 566 ℃. The main steam temperature of this plant is

566 ℃, so by definition this is supercritical (SC), but it is close to ultra-supercritical (USC).

・Output: 600,000 kW x a unit = a total of 600,000 kW

・PPU (SPC) retails 300,000 kW to ASC, and sells the remaining 300,000 kW to PLN.

・Because ASC’s power load lasts 24 hours in principle and remains stable relatively, the amount of power

sold to PLN stays constant except the periodical inspection time stated below. In other words, ASC can

be a reliable power supply source for PLN.

116

・Backups during periodical inspection time: Backups equivalent to 300,000 kW (to cover ASC’s power needs)

is offered by PLN.

【Case 2】

・Technology: CFB (Circulating Fluidized Bed)

・CFB may also be applied to sub-bituminous coal of Indonesia of low calorific value.

・Output: 150,000 kW x 3 units = a total of 450,000 kW

・PPU (SPC) retails 300,000 kW to ASC, and sells 150,000 kW to PLN

・Because ASC’s power load lasts 24 hours in principle and remains stable relatively, the amount of power

sold to PLN stays constant except the periodical inspection time stated below. In other words, ASC can

be a reliable power supply source for PLN.

・Backups during periodical inspection time: During a periodical inspection, a unit (150,000 kW) alone is halted

and power sale to PLN is also suspended. In other words, ASC’s plant load (300,000 kW) is covered with

the remaining two units (150,000 kW x 2 units = 300,000 kW).

117

3) Conceptual design and specifications of candidate equipment

In line with the aforementioned basic policy and, also, in reference to coal-fired power plants (fueled by

subbituminous coals) of identical size and type available in Indonesia, among others, basic specifications of

candidate equipment, presented in the two cases cited in the preceding section, are determined.

a) Site and major equipment

Fig. 3- 10 An Air Overview of ASC’s Anyer Plant

Note: The power plant is slated to be built on the site enclosed with the dotted line.

Source: Google Map

The site (captive) slated for the new power plant by ASC is located on top right in the photo above and covers

an area of 40ha at maximum. The 40ha-site include a small hill. With the hill left as it is, an effective area for

plant construction turns to be 15ha, which could be enlarged up to 40ha if the hill was levelled.

Within this site, housed will be the equipment cited below:

・Generating equipment, etc: Boiler, turbine, generator, flue-gas treatment systems (electrostaticprecipitator

(ESP), desulfurizor, denitrificator)

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・Incidental equipment for common use: Water treatment system, waste water treatment system, refueling

tank (for auxiliary oil for start-up)

・Fuel storage equipment (coal stockyard): Of silo type capable of preventing increases in the moisture

content caused by rainfalls

・Other equipment: Unloder, coal forwarding system

Of these, the area required for housing the generating equipment, etc. will be around 6ha in Case 1, and around

5ha in Case 2, in reference to exising cases. By virtue of designing, however, the both can be made more

compact.

It should be noted that for the ash dump, I entrust the coal ash processing to external contractors.

Fig. 3- 11 Plant Layout (Case: SC, 600MW×1）

Coal storage yard

Turbine building(Including

generator)

Supercrticalboiler

Flue gas treatment equipment

Induced Draft Fan（ IDF）

Chimney

Turbine transformer

Cooling seawater

pump

Thermal effluent

discharge device

Electric substation equipment

Wastewater treatment facility

0m 100m 200m 300m 400m 500m 600m

0m100m

200m300m

400m500m

119

図 3- 12 Plant Layout(Case 2: CFB, 150MW×3）

Coal storage yard

Turbine building(Including generator)

CFB boiler

Flue gas treatment equipment

Induced Draft Fan（ IDF）

Chimney

Turbine transformer

Cooling seawater

pump

Thermal effluent discharge device

Electric substation equipment

Oil tank for start-up

Wastewater treatment facility

0m 100m 200m 300m 400m 500m 600m0m

100m200m

300m400m

500m

120

Fig. 3- 13 An Air Overview of ASC’s Anyer Plant (Left Part of the Site)

Note: The slated plant construction site is located chiefly in the left part of the photo.

Spurce: ASC, Company Profile

b) Generated output and type of the power plant

In accordance with the two cases set in 2), generated output and the types are:

・Case 1 SC (Super Critical) 600,000 kW x 1 unit

(In-house use 25,000 kW, to PLN: 300,000 kW, to ASC: 275,000 kW）

・Case 2 CFB(Circulating Fluidized Bed) 150,000 kW x 3 units

(In-house use 25,000 kW, to PLN: 300,000 kW, to ASC: 275,000 kW）

c) Steam conditions and others

Steam conditions and others designed for the power plants are set as shown in the table below based on existing

design/introduction cases in Indonesia, etc.

Tab. 3- 17 Power Plant’s Steam Conditions and Others

Case 1 (SC) Case 2 (CFB)

Vapor amount 1,810t/h(100% load) 475t/h/unit×3(100% load)

Main vapor pressure 246 kg/cm2 174 kg/cm

2

Main vapor temperature 566℃ 541℃

Rehea tvapor temperature 566℃ 541℃

Thermanl efficieny 40.5% 37.6%

121

The unit designed for Case 1 is categorized as SC (Super Critical) because its main vapor temperature stands

below 566℃. Yet, given that the main vapor temperature and the reheat vapor temperature alike stays at 566℃,

the boundary distinguishing SC from USC, the unit designed for Case 1 is given the specifications that allow the

unit to be named a quasi-USC.

d) Coal calorific value

As for coals to be in use, the two cases examined in the section (3)-5 “Fuel Procurement” are employed.

Namely, attaching importance to the likelihood of constant coal supply security in the medium and long run,

coals in use are described below.

・Case 1: SC (Super Critical) 600,000 kW x a unit

・Coals of 5,000kcal/kg in calorific value are in use similarly to PLN’s plants.

・Case 2: CFB (Circulating Fluidized Bed) 150,000 kW x 3 units

・Coals of 4,200kcal/kg, most likely ranks to form the mainstream ahead, are in use.

e) Annual coal requirements

Referrig to existing design examples and taking coal calorific value in use into consideration, coal consumption

per hour is calculated as follows:

・Case 1: 255 t/h

・Case 2: 81.7 t/h/unit x 3 units ＝ 245 t/h

Based on the above, annual coal requirements are calculated as follows:

・Case 1: 255t/h×8,200hrs/y (=annual hours 8,760hrs/y－periodical inspection 560hrs/y）＝ 2,089,481 t/y

・Case 2: 245t/h×8,200hrs/y ＝ 2,009,498 t/y

f) Coal stocks

The amount of coal stocks varies depending on how much coals are received one time by the power plant in

what frequencies. Yet, in general, it is popularly in practice to keep coal stocks at a level equivalent to around

1~2-month requirements for plant operation.

This plant uses the coals from the mines in Kalimantan and Sumatra, the both located near Java. Therefore, by

taking the advantage in transportation into account, required coal stocks are assumed to be equivalent to a-month

(30-day) consumption.

It is also assumed that coals are stored with a silo system employed. Based on these assumptions, 30-day coal

stocks are calculated as follows:

・Case 1: Hourly coal sonsuption x 24hrs/d×30 days＝255t/h×24hrs/d×30 days＝183,467 t

・Case 2: 245t/h×24hrs/d ×30days＝176,444 t

g) Ash dumping yard

Coal ash processing and dumping will be entrusted to external contractors.

h) Water intake/discharge

Cases 1 and 2 alike use seawater as cooling water for their steam turbine condensers. Seawater is taken from

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the sea fronting the plant, while used seawater with raised temperatures should be discharged from a fairly distant

point (about 1.5km away) from the intke in order to prevent recirculation.

The intake method is designed after an open channel system, with a conduit installed from the intake to inland,

and a pump house is provided nearby the power plant. The pump house is equipped with a screening system,

chlorine feeding system and so on.

Cooling water is pipelined whenever it is forwarded in the route of pump house~power plant~discharge point,

with the pipelines buried underground.

i) Specifications (a summary)

As a summary, major specifications are tabulated below:

Tab. 3- 18 Basic Specifications of the Power Plant

Case 1 Case 2

1 Type SC (Super Critical) CFB (Circulating Fluidized Bed)

2 Generated output 600,000 kWx a unit 150,000kW×3＝450,000kW

3 In-house consumption 25,000kW 25,000kW

4 Output sold to PLN 300.,000kW 150,000kW

5 Output supplied to ASC 275,000kW 275,000kW

6 Annual running hours 8,200hrs/y×rated running 8,200hrs/y×rated running

7 Evaporation amount 1,810.0t/h

(100% load）

475.0t/h/unit×3

(100% load)

8 Main vapor pressure 246.0kg/cm2 174.0kg/cm

2

9 Main vapor temperature 566℃ 541℃

10 Reheat vapor temp. 566℃ 541℃

11 Thermal efficiency 40.5% 37.6%

12 Coal calorific value 5,000kcal/kg (Indonesian

subbituminous coals)

4,200kcal/kg (Indonesian

subbituminous coals)

13 Coal use (hourly) 255 t/h 245 t/h

14 Coal use (yearly) 2,089,481 t/y 2,009,498 t/y

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4) Subjects accompanied when employing the proposed technologies/systems and their solutions

Adopting a supercritical pressure power generation technology, there is a big advantage such as high efficiency

of the plant can be achieved.

On the other hand, unlike the existing power plant, the automation of new plants, personnel training operation

and maintenance is extremely important. Therefore, installation of simulator of power generation equipment, is a

more substantial problem of measures of training equipment and operation and maintenance training.

Also, because the water quality management of boiler water is very important in supercritical pressure power

generation equipment, water quality management of training at the time of acquisition and operation of knowledge

about water quality management is also important.

The EPC turnkey contract, in equipment installation and commissioning, receive performance guarantee items

to be specified in the contract are met, after the implementation of the project who has examination that there is no

equipment defects, it is equipment delivery.

In order to perform this examination to ensure properly technology negotiations for EPC contractor, it is

necessary to have the advanced technology and knowledge of power generation facilities.

In addition, it is also considered that also various technical problems occur commercial operation started later,

these technical problems are properly resolved, in order to properly technology negotiated with EPC contractor,

technical assistance by the power generation facility specialists it is desirable to receive.

Currently, in Indonesia, the mainstream is coal-fired power generation of subcritical pressure, even those made

in China for many, many things that it is stopped in trouble.

Enhancement of O & M will lead to the improvement of the improvement and profitability of the equipment

utilization rate of power generation facilities, and lead to the improvement of the reliability of investment

institutions to SPC, including the JBIC.

Chapter4

Evaluation of Environmental and Social Impacts

126

(1) Status-quo Analysis on Socio-Environmental Aspects

1) Analysis of status-quo

Construction of new coal-fired power plants in Indonesia, greatly expected for its contribution to easing

tightening electricity supply-demand problem at one hand, is also feared to be risk-inflicted in such points as

generally causing environmental problems, like air pollution, water pollution and GHG emissions, and invoking

opposition by local residents (resulting from possible impacts on their occupational/living environment,

land-expropriation troubles and so on). On-going situations in Indonesia are summarized below.

a) Status-quo of environmental problems

①Air pollution

In Indonesia, where rapid industrialization has been under way since the 1980s and on, air pollution is

aggravating particularly in metropolitan cities cheifly due to growing pollutants, typically nitrogen oxides, sulfur

dioxide and particulates, all attributable to surging fossil fuel consumption. Pollution caused by flue gas and

others from industrial sources still remains limited. The actual state unveils particularly worsening atomospheric

environment accelerated by choronic congestions which result from poorly-installed urban traffic systems, notably

railway.

Fig4-1 NO2 and SO2 Concentrations in Major Cities in Indonesia10

②Water pollution

10 Based on the Ministry of Environment’s Monitoring Program. Of the box diagram (showing data distribution of 248

counties/cities covered by the research), top and bottom of the box represent 75%-25% values, each, and the bar shows the maximum

value among the data. The data outside the range and marked with ● and ★ represent singular values. High NO2

concentrations are observed in Jakarta and other metropolitan cities, including Cilegon were the project site is located.

Roadside Industrial Residential Commercial

zone district district

Roadside Industrial Residential Commercial

zone district district

Note) The mark put on Cilegon City was made by the Study Team when editing

Source: State of the Environment Report Indonesia 2012

127

On water pollution, out of organic polluting loads, 25~50% is allegedly attributed to industrial effluents, and

50~75% to living effluents. As for industrial effluents, such industries as textile, pulp/papermaking, plywood

and rubber can be cited as major sources. Large plants, typically those run by Japan-affliated firms, are

well-equipped with waste water treatment equipment which assures adequate management, while small- and

medium-sized local plants, in not a few cases, do not have such equipment and discharge their industrial effluents

into rivers without any treatment. As a result, pollution of rivers are getting worse due to heavy metals, etc.

In addition, with few sewage installed, living effluents are left free either penetrating underground or

discharged into rivers without any treatment, the both contributing to aggravating pollution of rivers and

underground water. Usually, well water is used as living water. But, without purified, effluents penetrating

underground contaminate water, which is drawn from the well in some cases. This situation, combined with

contamination of river water, which is another living water source, highlights worsening water pollution as a

serious problem from hygienic aspect.

③Waste management

Wastes are grouped into “hazardous wastes” (usually called B3 Wastes after the initial letters of three

Indonesian words each meaning dangerous, hazardous and toxic) and other wastes. It is the so-called B3 Wastes

that are becoming a big problem in Indonesia. In Indonesia few waste dealers are capable of offering perfect B3

Waste treatment. Accordingly, at present B3 Wastes are stored within one’s site when they cannot be outsourced.

As for any industrial wastes other than hazardous materials, they are outsoured to professional collectors, by

whom they are either landfilled or incinerated. In regard to living wastes generated from households, they are

often thrown away to rivers and/or vacant lots as they are, thus posing a major cause of water pollution of rivers,

etc.

④Greenhouse gas (GHG) emissions

In 2000 Indonesia’s total GHG emissions in net amounted to 1.37GtCO2e. Of it cited as the largest source is

defrosration, responsible for 48%, followed by fuel consumption at 21%, peat fire at 12%, wastes at 11%,

agriculture at 5% and industrial sector at 3%. When combined, emissions resulting from defrostration and peat

amounted to 0.821GtCo2e, which accounts for 60%, with the remainder staying at 0.556GtCo2e. This level of

emissions is so high that Indonesia is joining among the world’s top 10 countries as GHG emitters. Because of

fuel switching under way to carbon-rich coals, the growth of domestic GHG emissions is outgrowing the GDP

growth and the fuel consumption growth, and is positioned as a grave environment problem in Indonesia today.

In an attempt to deal with its GHG emission problems depicted above, the Indonesian government founded the

National Climate Change Committee in 2008. Given that the country pledges a 26% cut in GHG emissions by

2020, which would be further increased to a 41% cut under cooperation of industrialized countries, the country’s

environmental policy needs to be watched carefully.

b) Land use/development (environment around the proposed project site)

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Cilegon, where the site slated for the proposed project (within the site of Anyer Plant owned by Asahimas

Chemical Co.), is a coastal industrial city situated in the westernmost Banten State in Java island. It is the center

of Indonesia’s heavy chemical industry where many steelworks and petrochemical plants are located.

This area, where Krakatau Steel Co., the largest steelmaker in Southeast Asia, is located, forms Krakatau Steel

Industrial District. Aside from Krakatau Steel Co. and Krakatau POSCO Co., many plants run by such

companies as Siemens AG, Asahimas Chemical Co., Chandra Asri Petrochemical Co. and Pertamina (state-owned

oil/gas corporation run by the government of the Republic of Indonesia) are integrated in this area and, thus, the

zone of this area has been developed well as an industrial district.

Fig4-2 Peripheral (Cilegon - Krakatau Steel Industrial Zone) of industrial clusters

Source: Google map

Sulalaya Power Plant

Krakatau POSCO Pertamina

Krakatau Steel

Asahimas Chemical

Chandra Asri Petrochemical

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2) Outlook (Without the project implemented)

The proposed project is designed to install a coal-fired generating capacity within the site of Anyer Plant owned

by Asahimas Chemical (ASC), a consolidated subsidiary of ASAHI Glass, in an effort to secure a power resource

that can contribute to solving Indonesia’s tightening electricity supply-demand balance.

Without this project, Asahimas Chemical would have no choice but to depend on PLN’s electricity supply. In

macro terms, the efforts to introduce the generating capacity equivalent to the unrealized capacity (the project’s

planned generating capacity: ASC’s demand covered + surplus output supplied to PLN) should be made on PLN

side (including IPPs).11,12 However, such risks as cited below are worried when generating capacity introduction

is tried by developing new coal-fired power plants.

Development Risk

In Indonesia, site-acquisition troubles often cause delays to power plant construction projects. That is,

land acquisition can pose a crucial risk.

(In sharp contrast, the proposed project, to be built within the Anyer Plant site owned by ASC as already

mentioned, is completely free from such a site-acquisition risk. Moreover, the plant site and neighboring

coastal regions are situated in an area already established as an industrial zone, where few residents live. In

other words, one of the superiorities inherent to the project is that it won’t be bothered by any troubles arising

from residents’ moving, compensation talks, etc. because there are few residents whose office/living

environment would directly be affected by the project.)

Plant Operation-related Risk

Comparing PLN’s commercial plant operation records with Japan’s in load factor terms, PLN’s records

stay at around 80% compared with about 95% achieved by Japan’s (10 utilities total), which shows how to

secrure high load factor and good reliability is a matter of crucial importance.13

This is counted as a risk

involved in cost and stable electricity supply which requires PLN to take adequate response in its

generating capacity construction efforts.

Environmental Pollution (GHG emissions, air pollution, etc.) risk

Compared with coal-fired generating capacities developed in Indonesia so far (PLN’s existing and planned

coal-fiered power plants as well as coal-fired generating capacities in general installed by various business

entities including in-house generators), the generating capacity to be introduced under the proposed project

11 Given the very tight electricity supply-demand balance of Java-Bali system today, power infrastructure construction is one of the

country’s top priorities. (⇒See Chapter 1 (2) 4) a)<Reference: Java-Bali System’s Reserve Capacity in Recent Days>) 12 The newly-inaugurated Jocowi administration decided power development of 35,000MW to be done under its medium-term

development plan (2015~19), and publicly announced construction of additional power plants, chiefly coal-fired ones (on the ground

that coal-fired plants were found best in economics and price competitiveness). 13 All the coal-fired power plants being developed by PLN under the 1st CRASH Program (PLN’s captive power plant construction

plan puts its total generated output at 10,000MW to be built by 2009, with only about 5,300MW completed as of 2014) are required

to use low-rank coals of under 4,500 kcal/kg in calorific value. No. 8 Unit at Sulalaya Power Plant, taken up in Chapter 3 (3) 5)

“Case Study – Information of Sulalaya Power Plant,” was also built under the aforementioned plan. The No.8 Unit, a China-made

generating capacity of sub-critical type, reportedly suffers frequent ill-functions. In addition, while PLN has been introducing

circulatory fluidized bed (CFB) boilers, which permit direct combustion of low-rank coals, foreign-made CFB boilers employed by

PLN have proved poor performances so far, registering a rash of events, including frequent accidental outages and extremely low

utilization factors.

As the principal factors behind the miserable records, some point out that such troubles should often arise from careless designing,

where prudent cares were paid little to the construction, and operating & maintenance technologies actually in use, on top of the

problems related to equipment design and quality of selected equipment due to lack of concerns to seek best-matching ones to

physical properties of coals in use.

130

not only features excellent efficiency but also assumes to be opertated by taking adequate measures to meet

stringent environmental standards. That is, without the project, the opportunity of realizing its comparative

advantages should be lost.14

14 On the calculations of CO2 emissions, see the next section “(2) Improved Environment by the Proposed Project.”

131

(2) Improved Enviroment Expected from the Project

As environmental improvements associated with the implementation of the project, the target project (coal-fired

power generation: Case 1, Case 2) were compared and CO2 emissions are discharged, the CO2 emissions are

calculated from the emission factor of Indonesia of system power from.

1) Comparison of CO2 emissions per unit

a) Indonesian Grid

Average emission factor of 2013 in Indonesia of system power (emissions per unit), according to the power

supply plan of PLN (RUPTL) 2013-2022 (Abridged), a 766 g-CO2 / kWh. However, this value is the total power

mean value, because it is not a value of the coal-fired, can not be used for comparison.

On the other hand, according to the CO2 Emissions from Fuel Combustion of IEA (2013 Edition), CO2

emissions per unit of Indonesia's coal-fired of 2011 is 1,065 g-CO2 / kWh.

b) the target project (Case 1, Case 2)

By the following equation, we compared the CO2 emissions per unit of the subject project.

· Annual coal consumption (t / year) = annual power generation amount of power (kWh / year) × 860 (kcal /

kWh) ÷ thermal efficiency (%) ÷ coal calorific value (kcal / kg) ÷ 1,000 (kg / t)

· Annual CO2 emissions (t-CO2 / year) = annual coal consumption (t / year) weight ratio of carbon content as a

percentage of coal × × CO2 and molecular weight ratio of carbon

The weight ratio of carbon content as a percentage of coal: from the literature information (Source:

TEPCO design, as well as Adaro, Inc.: E5000 & E4000 spec sheet), 55% (Case 1: 5,000kcal / kg), 50%

(Case 2: 4,200kcal / kg).

· CO2 and molecular weight ratio of carbon = 44/12

· CO2 emissions per unit (g-CO2 / kWh) = annual CO2 emissions (g-CO2 / year) ÷ annual power generation

amount of power (kWh / year)

As a result, CO2 emissions per unit of the subject project, case 1 (600 000 kW, SC) at 856 g-CO2 / kWh, case 2

(450 000 kW, CFB) has been estimated at 988 g-CO2 / kWh in.

When you compare it to the value of a), CO2 emissions per unit of the target project, compared to coal-fired

average of Indonesia, case 1 with a 20% reduction, was calculated to be 7% reduction in case 2.

In addition to the reference, "life cycle CO2 emissions assessment of Japan's power generation technology,"

Central Research Institute of Electric Power Industry According to (2010), pulverized coal-fired power of Japan

(Sub-C, SC, USC) and CO2 emissions from fuel combustion of unit is a 887 g-CO2 / kWh.

2) annual CO2 emission reduction

From the above results, by paying attention to the case 1 CO2 reduction is carried out, it was estimated annual

CO2 emission reduction.

132

· Annual CO2 emission reduction (t-CO2 / year) = average CO2 emissions per unit (t-CO2 / kWh) annual

amount of power generated × target project of Indonesia coal-fired (kWh / year) - the target project (Case 1

annual CO2 emissions) (t-CO2 / year)

As a result, CO2 emission reductions due to the target project (case 1), 1,026,012 t-CO2 / year, ie has been

calculated to be about 1.03 million t-CO2 / year.

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(3) Project’s Impacts on Socio-Environmental Aspects

1) Items checked for socio-environmental reasons

In order to make an impact assessment of the project on socio-environmental aspects, and pick out the items to

be checked for socio-environmental reasons at the next stage of this FS works, checks were made in reference to

“A Check List” appearing on JAIC’s “Environmental/Social Care Guidlines” as well as “A Check List” provided

in JBIC’s “Bank of International Cooperation’s Guidelines to Confirm Environmental/Social Cares.”

Check results are summarized by category, which are shown in following sections of a~e. To sum up, the

results reveal that this project, so prudently designed as employing adequate measures to care the environment and

society, is least likely to have any grave loads on environment nor produce negative impacts on the society.

a) Permits/explanations

Tab.4-1 Checks on Permits/Explanations Involving Socio-Environmental Cares

Environmental Item Major Check Points Check Results

(1)EIA and

environmental

permits

(a) If preparation is over of environmental impact

assessment (EIA) report, etc.

(b) If host government approves EIA report, etc.

(c) If incidental conditions accompany the

approval of EIA report, etc. If any, if such

conditions are satisfied.

(d) If required permits on environment other than

EIA, if any, already gained from local competent

government officies.

(a),(b),(c): Implementation of EIA on the project is

scheduled. Besides, as the power plant planned by

this project is slated to be built within the ANYER

plant site owned by ASC, on which EIA/AMDAL

were already made and approved, few problems are

likely in regard to siting.

(d): No extra permits are required at present.

(2)Explanations to

local stakeholders

(a)On project’s contents and impacts, if local

stakeholders’ understanding is gained by making

to them adequate explanations, including

information disclosure.

(b)If comments from residents and others are

reflected on project’s content.

(a),(b): Not implemented yet, because the project

still remains at planning stage. But, as

aforementioned, the site for this project is located

within ASC’s captive plant site, of which peripheral

coastal areas are also well-developed industrial

zone, opposition by local residents is unlikely.

(3)Examinations of

options

(a) If a plural number of alternatives to the project

plan are under consideration (including

socio-environmental matters).

(a): At planning stage, examined is what will be

adopted as optimal technology (not only in

economics but in environmental terms) under

restaints

Source: Study Team

134

b) Pollution control measures

Tab.4-2 Checks on Pollution Control Measures Involving Socio-Environmental Cares

Environmental

Items Major Check Points Check Results

(1) Air quality

(a)If emissions of air pollutants, notably sulfur

dioxide (Sox), nitrogen oxides (NOx) and dusts,

resulting from the power plant operation can

meet the host country’s emission standards, and

if such emissions make any area unable to meet

the host country’s standards.

(b) In case of coal-fired power plant, if air

pollution attributable to scattering coal dusts

from coal stockyard and particulate matters from

coal ash treatment yard is worried. If measures

are taken to mitigate such pollution.

(a),(b):With the project remaining at initial FS stage,

in-depth technology analysis is still under way, but it

is planned to introduce technologies to meet

emission standards (ex. electrostatic precipitator to

remove dusts, flue-gas desulfurizor to cut Sox

emissions, and Low-NOx burner/Two- Stage

Combustion system to slash NOx emissions).

(b): Coals used as fule are stored at coal stockyard

after forwarded from unloading berth via conveyer.

Dust scattering will be controlled by taking every

possible measure (ex. encloused conveyer, water

spraying).

(2)Water quality

(a) If effluents from power plant, including

heated ones, can meet the host country’s water

quality standards, and if such discharge makes

any area unable to meet the host country’s

standards and/or creates high-temperature water

zones

(b) In case of coal-fired power plant, if water

immersing from coal stockyard and coal ash

treatment yard can be acceptable under the host

country’s standards

(c) If measures are taken to prevent such

effluents from contaminating surface waters,

soils/underground water, oceans, etc.

(a),(b),(c): With the project remaining at initial FS

stage, in-depth technology analysis is still under

way, but it is planned to employ of technologies to

meet water quality standards.

(b),(c): On ash pond to dump coal ash, it is planne to

employ adequate measures to prevent immersing

liquids, if any, from contaminating public waters.

(c): On any other effluents from power plant, it is

planned to install waste water treatment

equipment/systems capable of offering adequate

treatment pursuant to specific standards.

(3)Wastes

(a) If wastes resulting from plant operation

(waste oil, waste chemicals) and such other

wastes as coal ash and by-product gypsum from

flue-gas desulfurization are adequately treated

or disposed of.

(a): With the project remaining at initial FS stage,

in-depth examination is still under way, but it is

planned to practice waste treatment/disposal

pursuant to specified rules.

(4)Noize/vibration (a) If noise and vibration can meet the host (a): With the project remaining at initial FS stage,

135

Environmental


country’s standards. in-depth examination is not made yet, but it is

planned to meet environmental standards along the

boundary of the site (by conducting environmental

monitoring along the boundary, which is legally

requied, and taking standard measures widely in use,

such as introduction of soundproof/sound-silencer

equipment and installation of soundproof walls

along the boundary).

Meanwhile, as aforementioned, the site for this

project is located within ASC’s captive plant site, of

which peripheral coastal areas are also

well-developed industrial zone, noise and vibration

that can cause grave damages to nearby residential

areas appears least likely.

(5)Land subsidence

(a) In case groundwater is pumped up in huge

quantities, if land subsidence is feared.

(a):No problem, because seawater is used as cooling

water. On utility water either, fears for land

subsidence are absent because the use of service

water is under consideration.

(6)Odor

(a) If there are odor sources. If any, are there

any measures taken to prevent ordor?

(a): Few odor sources are found in this project.

Source: Study Team

136

c) Natural environment

Tab.4-3 Checks on Natural Environment Involving Socio-Environmental Cares

Environmental


(1)Reserves

(a) If the site is located with any reserve

specified by the host country’s laws and/or

international accords, etc. If it is, if the project

has some impact on the reserve.

(a):The site is not located in any reserve specified by

the host country’s laws, international accords, etc.

(2)Ecological

system

(a) If the site includes virgin forests, tropical

natural forests and/or important habitats in

ecological terms (ex. coral reefs, mangrove

swamps, dry beach).

(b) If the site includes habitats of scare spieces of

which preservation is called for under the host

country’s laws, international accords, etc.

(c) In case grave impacts on ecological system

are feared, if measures are taken to mitigate such

impact on ecology

(d) If intake (surface water, underground water)

for the project produces impacts on water

environment, typically rivers. If measures are

taken to mitigate impacts on acuatic life.

(e) If discharge of heated waste water, intake of

cooling water in large quantities and/or discharge

of immersed water can have adverse effects on

ecological system in peripheral waters.

(a): The planned site for this project does not include

any of the areas cited left.

(b): The planned site for this project does not include

habitats of any scarce speices.

(c): With any habitats of scarce speices absent, no

grave impacts are anticipated.

(d),(e): With the project remaining at initial FS

stage, in-depth examination is not made yet, but it is

planned to employ, at the stage of detailed design,

necessary measures identified after checking what

must be done.

Source: Study Team

137

d) Social environment

Tab.4-4 Checks on Social Environment Involving Socio-Environmental Cares

Environmental


(1)Moving of

residents

(a) If the implementation of the project causes

non-spontaneous moving of residents. If so,

efforts are made to minimize effects of moving.

(b) If adequate explanations are made to affected

residents on compensation/living restoring

supports before their moving

(c) With research on residents’ moving made, if

moving can be well-planned for covering

conpensation-depending housing price and

restoration of living basis.

(d) If compensation is paid prior to moving.

(e)If compensation policy is prepared in written

forms

(f) If the plan is made byextending adequate cares

to the social weak, such as women, children, the

aged, the poor, minorities/native trribes among

the moving residents

(g) If agreement is gained from affected residents

before their moving

(h) If system is well-prepared for adequately

implementing residents’ moving

(i) If monitoring is planned for learning impacts

of moving

(j) If mechanism is constructed for dealing with

claims

(a),(b),(c),(d),(e),(f),(g),(h),(i),(j): This project

won’t cause residents’ moving.

(2) Life/living

(a) If project has adverse effects on residents’

living. If cares are taken to mitigate such effects

when necessary.

(b) If social infrastructure, required for

implementing the project is sufficient (ex,

hospital, school, road). If insufficient, any plan

is made for such infrastructure construction.

(c) If large trucks and other vehicles in service for

the project can affect peripheral road traffic

conditions. If cares are taken to mitigate effects

(a): As aforementioned, the site for this project is

located within ASC’s captive plant site, of which

peripheral coastal areas are also well-developed

industrial zone, significant impacts on nearby

residential areas are unlikely.

(b): Because environs of the project site have been

developed as an industrial district, social instructure

are well installed by and large.

(c),(d): With the project remaining at initial FS

stage, in-depth examination is not made yet, but, at

138

Environmental


on traffics when necessary.

(d) If inflows of workers, etc. for project’s works

have a danger of epidemics (incl. such infections

as HIV). If adequate cares are taken for public

hygienic reasons when necessary.

(e) If intake (surface water, underground water)

and discharge of heated waste water of the project

can have impacts on existing water use and use of

waters (particularly fishing industry).

detailed design stage, necessary measures are taken

after checking what are needed.

(e): With the project remaining at initial FS stage,

in-depth technology analysis is still under way, but,

because technology to meet water quality standards

is introduced as a matter of course, effects on

existing water use and use of waters will be limited.

(3) Cultural heritage

(a) If the project is feared to damage heritage,

historical spots and the like which are precious in

archaeological, historical and/or religious terms

and, also, if measures specified under the host

country’s domestic laws are taken into account.

(a): The left is not applicable to the project.

(4)Landscape

(a) In case landscape worthy for special cares is

present, if the project can have adverse effects on

it. If it can, if necessary measure are taken.

(a): The left is not applicable to the project.

(5) Minorities,

native tribes

(a) If cares are taken to mitigate effects on culture

and living style of minorities and native tribes in

the host country.

(b) If rights of land and resources rendered to

minorities and native tribes are respected.

(a),(b): The left is not applicable to the project.

(6) Working

environment

(a) If the host country’s laws on working

environment are observed in the project.

(b) If cares are taken for safety of project staffs in

hardware terms, including installation of safety

equipment to prevent working disasters and

management of hazardous materials.

(c) Including preparation of safety/health plan and

workers’ safety education (incl. traffic safety and

public health), if response measures are

planned/implemented for project staffs in

software terms.

(d) If adequate measures are taken so that

guardmen involved in the project should not

infringe safety of project staffs and local

residents.

(a),(b),(c),(d): : With the project remaining at initial

FS stage, in-depth examination is not made yet, but,

at detail design stage, as a matter of course,

necessary measures are taken after checking what

are needed.

Source: Study Team

139

e) Others

Tab.4-5 Checks on Other Items Involving Socio-Environmental Cares

Environmental


(1)Influence of

construction works

(a) If measures are prepared to mitigate pollution

during construction works (ex. noise, vibrations,

contaminated water, dusts, flue gas, wastes).

(b) If construction works can have adverse

effects on natural environment (ecological

system) and, also, if measures are prepared for

mitigating such effects.

(c) If construction works can have adverse

effects onsocial environment and, also, if

measures are prepared for mitigating such

effects.

(a),(b),(c): With the project remaining at initial FS

stage, in-depth examination is not made yet, but, at

detailed design stage, adequate measures are

naturally taken to mitigate effects of construction

works, if any.

(2)Accident-

preventive measure

(a) In case of coal-fired power plant, if plan is

made for preventing spontaneous ignition at

coal stockyard (ex. water-spraying system)

(a): With the project remaining at initial FS stage,

in-depth technology analysis is still under way, but,

it is planned to introduce technology/equipment

required for taking necessary measures.

(3)Monitoring

(a) If operator’s monitoring is planned and

implemented on the environmental matters likely

to produce some effects out of those cited above.

(b) How the items, methods, frequencies, etc. of

such monitoring plans are decided.

(c) If operator’s monitoring system (ex.

organization, staffs, equipment, budgets,

continuity of these) is established.

(d) If reporting forms, frequencies, etc. from the

operator to competent government offices and

others are regulated.

(a),(b),(c),(d): With the project remaining at initial

FS stage, in-depth examination is not made yet, but,

at detailed design stage, while reporting made with

the method and frequencies regulated, monitoring

system (ex. organization, staffs, equipment, budgets,

continuity of these) will be established.

(4)Others

(a)If quality standards for coals are set.

(b)If generating capacity is planned by taking

coal quality into account.

(a),(b):In parallel with examination of candidate

technologies, plan is made on coals in use by

selecting coal qualities and checking/confirming

availability of their procurement (both currently

under way).

Source: Study Team

140

2) Examinations of the project compared with other options

Among the options to secure power resources for any consumers in and around the site under discussion, those

cited below are viable and worthy for examination.

To depend on PLN.

To build new coal-fired power generating capacity.

As already mentioned, compared with coal-fired power generating capacity currently available in Indonesia

(PLN’s existing coal-fired power plants and other coal-fired power plants of various types planned generally by

any other projects), the power plant designed under this project will be equipped with highly efficient facilities

which are environment-benign thanks to a host of advanced eco-systems, each capable of offering adequate

measures to meet stringent environmental standards. In this sense, if the former option is taken, a strong

likelihood is that the country will loose a big chance to realize such comparative advantages inherent to this

project. Moreover, as aforementioned, the site slated for this project is located within ASC’s captive plant site, of

which peripheral coastal areas are already well-developed as industrial districts, whereby opposition by local

residents (due to such problems as their affected occupational/living environment and land expropriation troubles)

is least likely to pose serious impediments. And yet, construction of coal-fired power plants in this country can

be counted as risk-ridden by nature as depicted above.

As for the latter option, this project is proposed only after meticulous efforts with which a host of candidate

technologies were put to examination in hopes to identify optimal one under the constraints in this country and, in

that process of examination, a plural number of options were put to comparison in order to evaluate their

merits/demerits from various angles including their likely impacts on environment.15 From now on, at the stage

of detailed design, careful examination is planned to learn what impacts can be produced on environment by each

of the component technologies adopted in this project because of their characteristics, which are found

outstanding essentially.

3) Outcome of information gathering on socio-environmental impacts

During this FS works, an interview survey was made to the Bureau of Environment, Cilegon City, responsible

for environment impact assessment (EIA), from which following comments were provided.

On the project proposed, under which construction is planned within the site of ANYER plant owned by

ASC, the project appears to have few problems in terms of EIA-related general requirementsn, in part

because EIA on the site has already been made (though the project is naturally required to make an EIA of

its own). For instance, problems are noted little in regard to likely impacts on reserves, local residents,

among others.

15 See “Chapter 3 Project’s Contents and Examinations of Technological Aspect.”

141

(4) Outline of Host Country’s Laws Related to Socio-environmental Cares

and Essential Measures Required for Observance

1) Outline of socio-environmental cares-related laws involved in project implementation

a) Environmental management and environmental impact assessment

In Indonesia environmental impact assessment system (AMDAL standing for Analisis Menganai Dampak

Lingkungan in the Indonesian language) was introduced in 1986. Later, in 1993, under the “Ordinance No. 51

on Environmental Impact Assessment” of 1993, the system was drastically vamped, which chiefly included

streamlining the initial screening process and empowering a stronger authority to the Agency of Environmental

Impact Management on the project reviews in which a plural number of government officies were involved. In

1997, with the Law on Environmental Management enacted, the laws on environment were legally systematized.

Furethermore, in 2006 related guidelines were promulgated, and the Law on Environmental Management was

drastically amended. In 2012, when an environment license acquisition system was introduced, AMDAL was

amended as well (Ordinance No 27 of 2012). On the types and scales of projects and/or activities subject to EIA

are stipulated under the Environment Minister Regulation (No. 5 of 2012).

Tab.4-6 Major Laws on Environmental Management and EIA

Category Laws and the Like

Basic law ・ Law on Environmental Management (Law No. 32 of 2009)16

Ordinance ・ Ordinance on Environmental License (Ord. No. 27 of 2012)17

Presidential decree ・ Presidential Decreeon Environment Management Agency (P.D. No. 77 of 1994)

Ministerial ordinance

・ Environment Ministr’s Ordinance on Environment License Guidelines (No. 17 of 2012)

・ Environment Ministr’s Ordinance on Types of Projects and Activities Subject to EIA

(No. 11 of 2006)

・ Environment Ministr’s Ordinance on Types of Projects and Activities Required to Make

EIA (NO.KEP-11/MENLH/3/1994)

・ Environment Ministr’s Ordinance on the General Guidelines on Environment

Management Procedures and Environment Monitoring Procedures

(NO.KEP-12/MENLH/3/1994)

・ Environment Ministr’s Ordinance on the Guidelines on Formation of the Environment

Impact Assessment Committee and Its Management (NO.KEP-13/MENLH/3/1994)

・ Environment Ministr’s Ordinance on the Guidelines on Environment Impact Assessment

(No.2 of 2000)

・ Environment Ministr’s Ordinance on the Residents’ Involvement in EIA Process and

Information Disclosure (No. 8 of 2000)

・ Environment Ministr’s Ordinance on the Guidelines on EIA Preparation (No. 9 of 2000)

・ Environment Ministr’s Ordinance on the Guidelines on the Working System of the

Committee Responsible for Reviewing EIA Reports (No. 40 of 2000)

Source: Study Team based on The Ministry of Environment “Various Materials on Indonesia’s AMDAL Laws”,

materials furnished by Indonesia’s Environment Ministry, the EIA Div.

16 Enforced under the Law No. 4 of 1982, and drastically amended under the Law No. 23 of 1997. Amended in 2009, and the

resultant Law as amended was promulgated and enforced on October 3. 17 No. 51 of 1993, replaced by No. 27 of 1999 as amended, and by No. 27 of 2012 as amended.

142

b) Space planning

In Indonesia, space-planning laws has been prepared on the use and development of the country’s territorial

space. The first of the laws of this type weres the Presidential Decrees set forth in the 1980s, followed by the

enactment of the basic law entitled the “Law No. 26 on Space Planning of 2007.” Pursuant to the basic law and

its relevant laws and regulations, notably ministerial ordinances and presidential decrees, the national and local

governments (state and city/county) are preparing their basic plans for space utilization/development in their

juristictions, based on which they commit to zoning of reserves and development areas by purpose. Siting of

coal-fired power plant is also required to be coherent to space planning of the affected area, which is counted as an

essential precondition for AMDAL and issuane of environmental permits.

Tab.4-7 Major Laws on Space Planning

Category Laws

Basic law ・ Law on Space Planning (No. 26 of 2007)

Ordinances ・ Ordinance on National Space Planning (No. 26 of 2008)

・ Ordinance on the Community’s Rights and Duties to Participate in Space Planning as

well as Its Forms and Procedures (No. 69 of 1966)

Presidential decree ・ Presidential Decree on the Coorination Team Devoted to the Management of Nation’s

Territorial Space (No. 57 of 1989)

・ Presidential Decree on the Management of Reserves (No. 32 of 1990)



c) Major laws on environmental measures/stndards

Focusing on coal-fired power plant projects, the section extracts and summarizes major laws which specify

environmental measures/standards important for such projects.

Under the Law on Local Administration of 1999 (Law No. 22) paired with the Law on the National and Local

Fiscal Balancing,” extensive power decentralization has been driven forward from 2001 and on. Responsibilities

for environmental management, including air and water pollution, have been transferred to state and city

governments.

Tab.4-8 Major Laws on Environmental Measures/Standards Related to Coal-fire Power Projects

Field Laws

Air quality

・ Ordinance on the Prevention of Air Pollution (Ord. No. 41 of 1999)18

・ Environment Ministr’s Ordinance on Air Pollution Indicators (No. 45 of 1997)

・ Environment Ministr’s Regulation on the Standards of Flue Gas from Fixed-Source

Boilers (No. 7 of 2007)

・ Environment Ministr’s Regulation on the Standards of Flue Gas from Fossil Fuels-fired

Power Plants (No. 21 of 2008)

18 In 1993 the guidelines on the prevention of air pollution under the Environment Ministry’s jurisdiction were specified by a

ministerial ordinance, based on which environmental standards are set.

143

Field Laws

・ Environment Ministr’s Regulation on the Implementation of Preventive Efforts for

Local Air Pollution (No. 12 of 2010)

Water quality

・ Ordinance on Water Management and the Prevention of Water Quality Pollution (No.

82 of 2001)19

・ Ordinance on the Prvention of Marine Pollution and Destruction (No. 19 of 1999)

・ Environment Ministr’s Ordinance on the Standards of Industrial Effluents (No. 51 of

1995, No. 122 of 2004 as amended thereof)

・ Environment Ministr’s Ordinance on the Guidelines on the Determination of Water

Quality-polluting Loads on Water Resources (No. 110 of 2003)

・ Environment Ministr’s Ordinance on Water Quality Standards for Seawater (No. 51 of

2004, No. 179 of 2004 as amended thereof)

・ Environment Ministr’s Ordinance on the Standards of Effluents from Coal Mining and

Its Associated Operations (No. 113 of 2003)

・ Environment Ministr’s Regulation on the Effluents from Fossil Fuels-fired Power

Plants (No. 8 of 2009)

Noise/vibration ・ Environment Ministr’s Ordinance on Environmental Standards of Noise (No. 48 of

1996)

・ Environment Ministr’s Ordinance on Environmental Standards of Vibration (No. 49 of

1996)

Odor ・ Environment Ministr’s Ordinance on Environmental Standards of Odor (No. 50 of

1996)

Wastes ・ Law on Waste Management (No. 18 of 2008)



19 Relevant guidelines were specified by a ministerial ordinance, based on which environmental standards are set.

144

d) Emission standards applicable to fossil fuels-fired power plants

Presented below are the emission standards of pollutants (flue gas, effluents) from fossil-fueled power plants,

which are provided by the laws cited in the preceding section.20

①Flue gas standards

Tab.4-9 Flue Gas Standards for Fossil-fueled Plants (equipped with 24-hour monitoring system)

Index Max. allowance (mg/Nm3)

Coal Oil Gas

Sulfur dioxide (SO2)21

750 650 50

Nitrogen oxides (NOx) as an indicator22

750 450 320

Particulate matters (TP)23

100 100 30

Opacity 20% 20%

Source: Environment Ministr’s Ordinance on the Standards of Flue Gas Standards from Fossil Fuels-

fired Power Plants No. 21 of 2008 (Appendix 1B)

②Effluents standards

Tab.4-10 Effluent Standards for Fossil-fueled Plants’ CPU (Centra lProcessing Unit for effluents)

Index Unit Allowance

pH ― 6-9

Total suspending particulates (TSP) mg/L 100

Oils and fats mg/L 10

Free chlorine (Cl2) ※1 mg/L 0.5

Total chromium (Cr) ※2 mg/L 0.5

Copper (Cu) mg/L 1

Ferrous (Fe) mg/L 3

Zinc (Zn) mg/L 1

Phosporous (PO4-

) mg/L 10

※1 When cooling tower blow Down flows through the liquid waste treatment ground , ※2 When I inject phosphoric acid

Source: Environment Ministr’s Ordinance No. 8 of 2009 (Appendix 1)

20 The Ordinance of the Prevention of Air Pollution (No. 41 of 1999) set forth air quality standards for 13 matters. The Environment

Minister’s Ordinance (No. 45 of 1997) introduced pollution standard indexes. Also, the Ordinance on Water Management and the

Prevention of Water Quality Pollution (No. 82 of 2001) stipulated environmental standards of fresh water which are grouped into

four types by use, while water quality standards for seawater is regulated under the Environment Minister’s Ordinances (Nos. 51

and 179 of 2004). The standards of effluents originating from fossil-fueled power plants are provided by the Environment

Minister’s Regulation (No. 8 of 2009). 21 Gaseous volume is measured under standard conditions (atmospheric temperature at 25.0℃, atmospheric pressure 1 atm.) 22 Opacity is employed as a practical monitoring index. 23 On all allowances, it is required to achieve 95% of the specified levels at least within 3 days.

145

Tab.4-11 Effluent Standards for Fossil-fueled Plants’ Boilers


pH ― 6-9

Copper(Cu) mg/L 1

Ferrous (Fe) mg/L 3


Tab.4-12 Effluent Standards for Fossil-fueled Plants’ Cooling Towers


pH ― 6-9

Free chlorine (Cl2) ※ mg/L 1

Zinc (Zn) mg/L 1

PO4-

mg/L 10

※ When cooling tower blow Down does not flow through the liquid waste treatment ground


Tab.4-13 Desalinated Effluent Standards for Fossil-fueled Plants’ Effluent Treatment Plants


pH ― 6-9

Total suspending particulates(TSP) mg/L 100


③Discharged cooling water standards (incidental facility)

Tab.4-14 Standards of Discharged Cooling Water from Fossil-fueled Plants


Water temperature ℃ 40 ※1

Free chlorine (Cl2) ※2 mg/L 0.3

※1 Result of a measurement of the moon average in the drainage exit , ※2 When a water source of supply does not flow through the liquid waste treatment ground


Tab.4-15 Standards of Desalinated Water Discharged from Fossil-fueled Plants


pH ― 6-9

Salinity concentrations ※ ‰ Salinity concentrations of the effluents should

become identical to that of seawater within

30m distant from the discharged point.

※ When desalination processing waste water does not flow through the processing ground


146

Tab.4-16 Standards of Effluents from Flue-gas Desulfurization System

(Seawater-based Wet Type Scrubber) from Fossil-fueled Plants


pH ― 6-9

SO4(2-) ※ % Incremental sulfate should be under 4%

compared with sulfate concentrations of raw

water (seawater).

※ When the drainage of the seawater wet process scrubber system is not called off in the processing ground


④Effluents standards (coal stockyards)

Tab.4-17 Effluents Standards for Coal Stockyards


pH ― 6-9

Total suspending particulates (TSP) mg/L 200

Ferrous mg/L 5

Manganese mg/L 2


⑤Effluents standards (oil contents)

Tab.4-18 Standards of Waste-oil-containing Effluents


COD ※ mg/L 300

Total suspending particulates (TSP)) mg/L 110

Oils mg/L 15

※ When waste water containing oils does not flow through the processing ground


2) EIA’s Contents and others required by the host country before project implementation

To start a project in Indonesia, an Environmental Impact Assessment (EIA; AMDAL) must be made so as to

demonstrate principal environmental requirements are cleared. The power to implement environmental impact

assessment is endowed to the government office having the jurisdiction over the project, of the first-class local

government, while the Environmental Management Agency is expected to act as a coordinator overall.24

a) Applications/approvals

The power to implement environment impact assessment is endowed to the central government’s ministry

having the jurisdiction over the project, as well as the state governments and special administrative districts across

the country, with each institution concerned expected to form its own “Environmental Asseessment Committee”

24 The proposed project is under the jurisdiction of Cilegon City.

147

which is responsible for prior screening and reviews on the contents of EIA reports. Of them, the “Central

Committee for Environmental Impact Assessment” set at the national government level is chaired by the head of

the ministry having the jurisdiction over the project, while the committees at the local level are presided by state

governors. These EIA committees are two-tiered in general and consist of a standing committee and a

non-standing committee, with the former participated by the representatives of competent administrative

organizations, experts on environmental issues and environmental groups, and the latter by the representatives of

citizens two. The flow of application and permits is summarized below.

①Screening

The entity which plans or implements a project files a project plan to the office having the jurisdiction thereof,

where it is put to screening to determine if environment impact assessment needs to be made on the planned

project (on which judgment/decision by the EIA committee is made within 30 days at latest).25

②Scoping

In case the need for EIA implementation is decided, the project entity is required to submit AMDAL research

specifications (TOR) and implementation plan (KA-ANDAL), which are reviewed by local administrative staff in

charge within 30 days at latest.26

③Approval of AMDAL

Continuing from the above, the project entity is required to prepare and submit an EIA report (ANDAL) and a

planning documents for environmental management plan and environmental monitoring plan (RKL・RPL). On

these, the EIA committee judges/determines their compatibility to the prescribed requirements within 75 days at

latest. (When found compatible) the project can be approved by either the Environment Minister or the

Governor concerned.

b) Organization of AMDAL documents

The environmental report consists of following documents:

EIA Implementation Plan

：Terms of Reference (Kerangka Acuan/KA ANDAL)

Environmental Impact Assessment (ANDAL)

：Environmental Impact Analysis (Analisis Dampak Lingkungan/ANDAL)

Environmental Management Plan (RKL)

：Environmental Management Plan(Rencana Pengelolaan Lingkungan Hidup /RKL)

Environmental Monitoring Plan (RPL)

：Environmental Management Plan(Rencana Pemantauan Lingkungan Hidup /RPL)

25 Screening is made in pursuant to the list specified by the Environment Ministry’s Ordinance No.3 of 2000 (amended by Ministry’s

Ord. No.12 of 2001 and No. 11 of 2006). Under the law, the project entity isrequired, after screening, to prepare EIA research

spesifications (TOR) (scoping). Also, in 2012, an environmental license acquisition system was introduced and AMDAL was

amended as well (Ord. No. 27 of 2012), with which EIA procedures must comply.

26On the review process, conventional rules, stating that “EIA Committee” shall make the revies within 75 days at latest, was

streamlined by amendment of AMDAL in 2012 (Ord. No.27 of 2012).

148

(5) Vital Matters to Be Done by the Concerned Entities in the Host

Country for Successful Project

In order to carry out the proposed project in Indonesia it is required first to make an environmental impact

assessement so as to demonstrate the project can satisfy all of chief requirements of the country. While Cilegon

City, having the jurisdiction over the proposed project, is empowered to implement EIA on the project, it is

essential to obtain relevant permits by swiftly taking necessary application/approval procedures.

Chapter5

Financial and Economic Evaluation

152

(1) Integration of project costs

1）Construction costs (design, procurement, construction works: EPC)

Based on the power plant’s system configuration (Case 1, Case 2) discussed in Chapter 3, and in referrence to

the cases of cost design done for existing power plants (SC, CFB), the construction costs incurring in the two

cases were added up. The results are shown in Table 5-1 and Table 5-2.

Tab.5- 1 Construction Costs (Case 1: SC 600,000 kW x a unit)

Item


In dollars





systems 47.4 105.4 55.8




7 Sub-total 545.5 1,212.8 641.7


9 Total 600.0 1,334.1 705.9


Tab.5- 2 Construction Costs (Case 2: CFB 150,000 kW x 3 units)

Item


In dollars





systems 31.6 115.7 40.8




7 Sub-total 346.1 1,266.2 446.6


9 Total 380.7 1,392.8 491.3

Exchange rate: US$1＝Rp 12,600

153

2）Initial investment cost

The costs below were counted as initial investment cost.

a) EPC cost mentioned above.

b) Cost to install additional substation to interconnect to 150kV-transmission line.

c) Sundry costs incurring in finance arrangement and permit-acquisition

d) Interest accruing during construction of power plant, substation and transmission line (interest taken into

the principal)

Interest during construction was calculated on the assumption that a lump-sum loan (Case 1: 71.7% of the total

cost, Case 2: 59.3% thereof) would be provided in the first year of the construction period (3.0 years) under the

terms below.

① JBIC investment finance:

Annual interest rate: Standard interest rate (LIBOR: US$, 6 months) 0.3768% + risk premium 5.0%* =

5.3768%

(*Note: Risk premium will be actually decided after evaluation in each individual case, here for the IIR

estimates, based on hearing results from the JBIC, was set here as 5.0%.)

Term of repayment: 15 years

Term of grace: 3 years

Repayment method: Principal paid back in equal installments

② Others:

Annual interest: 8.00% (provisionally assumed)

Term of repayment: 15 years

Term of grace: 3 years

Repayment method: Principal paid back in equal installments

Tab.5- 3 Initial Investment Cost (Case 1)

Item


In dollars


1 EPC cost (see Tables 5-1, 5-2) 600.0 1,334.1 705.9


3 Sundry cost（1+2=5%） 30.1 67.7 35.4


5 Total 725.0 1,420.7 837.8

US$1＝Rupia 12,600

154

Tab.5- 4 Initial Investment Cost (Case 2)

Item


In dollars

（US$ Mil.） In Rupiah (Rp. Bil.)

In dollars

（US$ Mil.）

1 EPC cost (see Tables 5-1, 5-2) 380.7 1,392.8 491.3


3 Sundry cost（1+2=5%） 19.1 70.6 24.7


5 Total 455.2 1,482.3 572.8

US$1＝Rupia 12,600

3) Running costs

The costs below were counted as running costs.

a) Cost incurring in operation and maintenance

b) Cost to purchase coals used as fuels

・Annual coal requirements estimated in Chapter 3 x unit price of coals

・Unit price of coals:

・Based on the table “A Data List by Calorific Value and by Brand” presented in Chapter 3, the unit

prices below were employed as the representative ones.

・Case 1（5,000kcal/kg） 57.65 US$/t

・Case 2（4,200kcal/kg） 35.00 US$/t

c) Land costs: With construction site already available, no additional costs, incl. rent.

d) Various premiums: Included in the operation/maintenance cost.

e) Interest payment: Annual interest paid when paid back under the terms shown in 2).

f) Corporate tax rate: 25%

Tab.5- 5 Running Costs (Case 1)

Item


In dollars


In dollars

（US$ Mil.）


2 Fuel 0.0 1,517.8 120.5

3 Land 0.0 0.0 0.0




US$1＝Rupia 12,600

155

Tab.5- 6 Running Costs (Case 2)

Item


In dollars


In dollars

（US$ Mil.）


2 Fuel 0.0 886.2 70.3

3 Land 0.0 0.0 0.0




US$1＝Rupia 12,600

156

(2) Major Results of Preliminary Financial/Economic Analysis

1）Financial internal rate of returns (FIRR)）

FIRR (financial internal rate of returns) was calculated based on the preconditions below.

① The selling prices of electricity were set as follows.

・The price of electricity sold from PPU (SPC) to PLN

・Set at set 656 Rp/kWh based on Article 2 of the Energy and Mineral Resources Ministry’s

Ordinance No. 4 of 2012, “Ordinance on PLN’s Purchase Price for Renewables-based or Surplus

Output from Small/Medium Resources.”

・However, given that the purchase price is actually settled by bilateral negotiations with PLN, a

strong likelihood is that a much higher price can be settled by such negotiations. Accordingly, the

price set above is a provisional value for the purpose of IPP calculation as of now.

・The price of electricity sold from PPU (SPC) to ASC

・Set at set 656 Rp/kWh as in the case above.

・However, the selling price is actually settled by bilateral negotiations between SPC and ASC, with

an endorsement of Cilegon City. Meanwhile, when interviewed, Cilegon City answered that the

City won’t care even if the price would be set much lower than the selling price tyo PLN. The

price set above is a provisional value for the purpose of IPP calculation as of now.

② Annual running hours was set at 8,200 hours (Annual total hours 8,760 hrs. – periodical inspection 560

hrs.)

③ Generating efficiency (thermal efficiency) was set at 40.5% (Case 1: SC) and 37.6% (Case 2: CFB), and

falling output and deteriorating efficiency should be unlikely with continuous efforts for adequate

maintenance.

④ In-house consumption at the power plant was set at 25,000 kW×8,200hrs/y.

⑤ Calorific values of coals used as fuel were set at 5,000kcal/kg (Case 1) and 4,200kcal/kg (Case 2), the

coal prices assumed at 57.65 US$/t (Case 1) and 35.00 US$/t (Case 2), respectively.

⑥ The rate of inflation, set at 2.39%, a median of the last 10 years in the U.S., taken because the cost was

calculated in US dollars, was reflected on returns and running costs from the second year and on after

plant operation started.

⑦ Given the 3-year construction period, plant operation and loan repayment was assumed to start from the

fourth year and on.

⑧ Depreciation was assumed to be made with the straight line method, no scrap value, and 40-year

depreciation period.

⑨ The period of plant operation was assumed to be 40 years, identical to the depreciation period.

⑩ Of the funds raised, the ratios between capital contributions and loans were assumed to be 28.3%: 71.7%

(Case 1), 40.7%:59.3% (Case 2).

157

Calculation results of FIRR are shown in Tables 5-7 and 5-8.

FIRR was estimated at 11.5% for Case1, and at 14.3% for Case 2.

Given that these outvalue Indonesia’s long-term interest rate (10-year national bonds’ yields) (7~9%) in the last

12 months, this project is considered highly feasible in financial terms on the assumption of the conditions

described above.

Tab.5- 7 FIRR Caluculation Results (Case 1)

（Unit: US$Mil.）

Yea

r

Investme

nt

Return

s

Running

cost

Principal & interest paid

back

Depreciati

on

Pre-tax

profit Tax

After-tax

profit

Cash

flow

1 2 3 4 5 6=2-3-4-5 7 8=6-7 9=8+5+4-1

1 279.26 -279.26

2 279.26 -279.26

3 279.26 -279.26

4 245.48 144.80 53.63 20.94 26.10 6.53 19.58 94.15

5 251.35 148.26 53.63 20.94 28.51 7.13 21.38 95.96

6 257.35 151.80 53.63 20.94 30.97 7.74 23.23 97.81

7 263.50 155.43 53.63 20.94 33.50 8.37 25.12 99.70

8 269.80 159.15 53.63 20.94 36.08 9.02 27.06 101.64

9 276.25 162.95 53.63 20.94 38.72 9.68 29.04 103.62

10 282.85 166.84 53.63 20.94 41.43 10.36 31.07 105.65

11 289.61 170.83 53.63 20.94 44.20 11.05 33.15 107.73

12 296.53 174.91 53.63 20.94 47.04 11.76 35.28 109.86

13 303.62 179.10 53.63 20.94 49.95 12.49 37.46 112.04

14 310.88 183.38 53.63 20.94 52.93 13.23 39.69 114.27

15 318.31 187.76 53.63 20.94 55.97 13.99 41.98 116.56

16 325.92 192.25 53.63 20.94 59.09 14.77 44.32 118.90

17 333.71 196.84 53.63 20.94 62.29 15.57 46.72 121.29

18 341.68 201.55 53.63 20.94 65.56 16.39 49.17 123.75

19 349.85 206.36 20.94 122.54 30.64 91.91 112.85

20 358.21 211.29 20.94 125.97 31.49 94.48 115.42

21 366.77 216.34 20.94 129.48 32.37 97.11 118.06

22 375.54 221.51 20.94 133.08 33.27 99.81 120.75

23 384.51 226.81 20.94 136.76 34.19 102.57 123.51

24 393.70 232.23 20.94 140.53 35.13 105.39 126.34

25 403.11 237.78 20.94 144.39 36.10 108.29 129.23

26 412.74 243.46 20.94 148.34 37.08 111.25 132.20

27 422.61 249.28 20.94 152.38 38.10 114.29 135.23

28 432.71 255.24 20.94 156.53 39.13 117.39 138.34

158

Yea

r

Investme

nt

Return

s

Running

cost


back

Depreciati

on

Pre-tax

profit Tax

After-tax

profit

Cash

flow

1 2 3 4 5 6=2-3-4-5 7 8=6-7 9=8+5+4-1

29 443.05 261.34 20.94 160.77 40.19 120.58 141.52

30 453.64 267.59 20.94 165.11 41.28 123.83 144.78

31 464.48 273.98 20.94 169.56 42.39 127.17 148.11

32 475.58 280.53 20.94 174.11 43.53 130.58 151.53

33 486.95 287.23 20.94 178.77 44.69 134.08 155.02

34 498.59 294.10 20.94 183.54 45.89 137.66 158.60

35 510.50 301.13 20.94 188.43 47.11 141.32 162.27

36 522.70 308.32 20.94 193.44 48.36 145.08 166.02

37 535.20 315.69 20.94 198.56 49.64 148.92 169.86

38 547.99 323.24 20.94 203.81 50.95 152.85 173.80

39 561.09 330.96 20.94 209.18 52.29 156.88 177.83

40 574.50 338.87 20.94 214.68 53.67 161.01 181.95

41 588.23 346.97 20.94 220.31 55.08 165.23 186.18

42 602.28 355.27 20.94 226.07 56.52 169.56 190.50

43 616.68 363.76 20.94 231.98 57.99 173.98 194.93

計 837.77 804.50 837.77 3,735.47 4,539.97

FIRR 11.5%

Table 5-8 FIRR Calculation Results (Case 2)

(US Mi.$）

Yea

r

Investme

nt

Return

s

Running

cost


back

Depreciati

on

Pre-tax

profit Tax

After-tax

profit

Cash

flow

1 2 3 4 5 6=2-3-4-5 7 8=6-7 9=8+5+4-1

1 190.93 -190.93

2 190.93 -190.93

3 190.93 -190.93

4 181.44 87.27 30.88 14.32 48.97 12.24 36.72 81.93

5 185.78 89.36 30.88 14.32 51.22 12.80 38.41 83.61

6 190.22 91.49 30.88 14.32 53.52 13.38 40.14 85.34

7 194.76 93.68 30.88 14.32 55.88 13.97 41.91 87.11

8 199.42 95.92 30.88 14.32 58.30 14.57 43.72 88.92

9 204.18 98.21 30.88 14.32 60.77 15.19 45.58 90.78

10 209.07 100.56 30.88 14.32 63.30 15.83 47.48 92.68

11 214.06 102.96 30.88 14.32 65.90 16.47 49.42 94.62

12 219.18 105.42 30.88 14.32 68.55 17.14 51.41 96.62

13 224.42 107.94 30.88 14.32 71.27 17.82 53.45 98.65

159

Yea

r

Investme

nt

Return

s

Running

cost


back

Depreciati

on

Pre-tax

profit Tax

After-tax

profit

Cash

flow

1 2 3 4 5 6=2-3-4-5 7 8=6-7 9=8+5+4-1

14 229.78 110.52 30.88 14.32 74.05 18.51 55.54 100.74

15 235.27 113.17 30.88 14.32 76.90 19.23 57.68 102.88

16 240.89 115.87 30.88 14.32 79.82 19.96 59.87 105.07

17 246.65 118.64 30.88 14.32 82.81 20.70 62.11 107.31

18 252.55 121.48 30.88 14.32 85.87 21.47 64.40 109.60

19 258.58 124.38 14.32 119.88 29.97 89.91 104.23

20 264.76 127.35 14.32 123.09 30.77 92.32 106.64

21 271.09 130.39 14.32 126.38 31.59 94.78 109.10

22 277.57 133.51 14.32 129.74 32.43 97.30 111.62

23 284.20 136.70 14.32 133.18 33.30 99.89 114.21

24 291.00 139.97 14.32 136.71 34.18 102.53 116.85

25 297.95 143.31 14.32 140.32 35.08 105.24 119.56

26 305.07 146.74 14.32 144.01 36.00 108.01 122.33

27 312.36 150.25 14.32 147.80 36.95 110.85 125.17

28 319.83 153.84 14.32 151.67 37.92 113.75 128.07

29 327.47 157.51 14.32 155.64 38.91 116.73 131.05

30 335.30 161.28 14.32 159.70 39.92 119.77 134.10

31 343.31 165.13 14.32 163.86 40.96 122.89 137.21

32 351.52 169.08 14.32 168.12 42.03 126.09 140.41

33 359.92 173.12 14.32 172.48 43.12 129.36 143.68

34 368.52 177.26 14.32 176.94 44.24 132.71 147.03

35 377.33 181.50 14.32 181.51 45.38 136.14 150.46

36 386.35 185.83 14.32 186.19 46.55 139.65 153.97

37 395.58 190.27 14.32 190.99 47.75 143.24 157.56

38 405.03 194.82 14.32 195.89 48.97 146.92 161.24

39 414.72 199.48 14.32 200.92 50.23 150.69 165.01

40 424.63 204.25 14.32 206.06 51.52 154.55 168.87

41 434.78 209.13 14.32 211.33 52.83 158.50 172.82

42 445.17 214.13 14.32 216.72 54.18 162.54 176.86

43 455.81 219.24 14.32 222.24 55.56 166.68 181.00

計 572.80 463.22 572.80 3,868.88 4,332.10

FIRR 14.3%

160

2）Economic internal rate of returns (EIRR)

EIRR is a discout rate where the present value of social benefits of a project carried out chiefly by public

organization becomes equal to the present value of social costs. Because this is a project carried out by private

firms, EIRR calculation is omitted.

3）General appraisal

Calculation results put FIRR of the proposed project at 11.5% (Case 1) and 14.3% (Case 2).

These results considerably outstrip Indonesia’s long-term interest rate (7~9%), thus suggesting excellent

feasibility of this project.

As one of the reasons, it is attributable to that the project is free from the running cost incurring in land use,

because the site for power plant construction has already been secured by ASC. Among others, availability of

relatively inexpensive subbituminous coals abundant in coal-rich Indonesia can be cited.

On top of these, the project is expected to allow electric power procurement for much cheaper price than

offered by PLN and, through inverse current of power into PLN’s grids which are badly in need of electricity, the

project can contribute to alleviating Indonesia’s tightening electricity supply and demand.

In the meantime, while the calculations were made by setting the PLN’s purchase price cheap at 656 Rp/kWh

(approx. 6 cents/kWh) identical to that for in-house power producers’ surplus output, the price is actually settled

by bilateral negotiations with PLN. Considering the project’s contribution to mitigating PLN’s grid problems, a

likelihood is that a higher price can be settled by negotiations. If so, with FIRR standing higher than calculated

this time, this project is likely to demonstrate even more excellent feasibility in economic terms.

Chapter6

Planned Project Schedule

164

The execution schedule of the project is as follows. This project is construction of the power plant executed in

existing plant premises. Therefore, there is no problem of concerning making the site safe. In addition, there are

too neither of problems concerning the influence on an environmental society, too. In other words, it is judged that

achievement that is smoother than the construction of a new power plant is possible.

Fig.6-1 Project Schedule

(Fiscal Year) 2015 2016 2017 2018 2019

(Quarter) 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

detailed FS

detailed design

SPC Formation

Financing

IUPTL & WU

AMDAL

PPA with PLN

Coal Supply Agreement

EPC Selection and Contract

O&M Selection and

Contract

Construction

process

Plant Construction

(▲：Operation starting)

Planning

Securing of

resource

Obtaining of

permits

Contract

negotiation

Source: Study Team

Chapter7

Implementing Organizations

168

(1) Competent Organizations of the Host Country

To realize the proposed project essentially requires the preparation of good environment for project

organization, for which negotiation/coordination and cooperation with the host country’s competent offices &

organizations, listed below, become a matter of vital importance. Their jurisdictions and roles, among others, are

summarized below (to the extent they are involved in project implementation).

Table 7-1 Jurisdictions & Roles of Host Country’s Competent Organizations

Competent Organizations Jurisdictions & Roles

Indonesian

Government

Ministry of Energy

and Mineral

Resources

Approval of service area for electricity supply service.

Cilegon City Mines & Energy

Div. , Bureau of

Commerce &

Industry Coops

Licensing of electricity supply service

Approval of selling price for electricity supply in the service area

involved when electricity supply service is offered.

Local Bureau of

Environment

Approval of AMDAL

Management/supervision of environmental monitoring

PLN Approval of service-area transfer involved when electricity supply

service is offered.

Conclusion of PPA (for selling electricity to PLN) when electricity

supply service is offered.

Source: Prepared by the fact-finding mission.

(2)Participating Entities in the Project

The entities participating in the efforts to organize the project and their roles & responsibilities are summarized

below.

1) Project development stage

To begin with, this project was planned in an attempt to satisfy Asahimas Chemical’s needs. Accordingly,

during the initial stage of project development, reviews on the peoject fesibility and efforts to install (prepare)

good environment for project organization will be made under the leadership taken by the company.

Afterwords, it is planned that the entities participating in the project will form a prime organizer (SPC),27

which will act as the principal entity in making various efforts for preparing project environment.

27 Japanese trading companies and electric utilities, among others, are assumed to be major contributories.

Meanwhile, through the provision of its site (contribution in kind), Asahimas Chemical is likely to seek a direction of

having influence on this project in the capacity of off-taker.

169

Table 7-2 Entities Participating in Project Development Stage and Their Roles & Responsibilities

Entities Roles & Responsibilities

Asahimas Chemical (Initial project development stage)

Detailed FS

Preparing electricity-supply-service license application.

Negotiating service-area approval for electricity supply service.

Preparing AMDAL application.

Negotiating PPA with PLN.

Negotiating long-term supply contracts with coal supply sources.

Selection and negotiation of EPC/O&M

Arranging SPC formation.

Negotiating finance.

SPC Obtaining the electricity-supply-service license.

Obtaining the service-area approval for electricity supply service.

Obtaining AMDAL approval.

Concluding PPA with PLN.

Concluding PPA with ASC.

Concluding long-term supply contracts with coal supply sources.

Concluding EPC/O&M contracts.

Finance close


2) Project implementation stage

During the project implementation stage, SPC will act as the project entity and offer electricity supply services

to the off-takers (Asahimas Chemical and PLN).

Table 7-3 Entities Participating in Project Implementation Stage and Their Role& Responsibilities

Entities Roles/Responsibilities

Asahimas Chemical Participating in the project in the capacity of contributory in kind

(provision of land).

Concluding PPA with SPC as a major off-taker.

(After the plant commissioned) receiving electricity and paying its

tariff.

SPC Preparing the project system.

(After the plant commissioned) offering electricity supply

services.

O&M(management)


Chapter8

Technical Advantage of Japanese Companies

172

(1) Participation form of Japanese companies that are assumed (investment,

equipment supply, facilities operation and management, etc.)

The subject project of this FS study, we aim to take advantage of JBIC's project finance, to do so is essential

proactive involvement of Japanese companies. Also when receiving investment from other investors and lenders,

Japanese companies proactive involvement of the leading credit material.

Specifically, participation of Japanese companies to the following field is assumed.

1) Investment

Projects that are subject to Overseas Untied Loan Insurance of project finance and NEXI by JBIC (Japan trade

insurance) are generally of the entire Japanese companies Invested has been demanded more than 30% of the total

amount of investment. Have been made also mention that effect at the time of hearing from JBIC.

As a candidate of Japanese companies that may be investor, Japanese power companies, trading companies, and

the AGC and the like are considered.

It should be noted that, as a candidate of Japan other than companies overseas investors, overseas power

investment company (IPP companies of Asia where Japanese companies have invested, etc.), be considered such

as Indonesia domestic operators.

2) Equipment supply

The domestic heavy electrical manufacturers, many companies that had a high level of technology and product

development capabilities that meet the advanced technology needs, environment compared to overseas

correspondence, energy conservation, and the competitiveness excellent technical aspects such as smaller and

lighter have.

Also super critical pressure (SC) power generation facilities, has been forming technology in harsh

environmental standards for many years in Japan, I have a wealth of delivery record. Recently has increased the

cost competition with overseas manufacturers (especially China), but the reliability of Japanese companies in the

technical high.

Looking at the track record orders of overseas Japanese manufacturers since 2011 related to supercritical

pressure (SC) coal-fired equipment, Japanese manufactures have been piled up orders steadly, such as Toshiba

from India and South Korea, Hitachi (now: Mitsubishi Hitachi Power Systems) from India, Mitsubishi Heavy

Industries (now: Mitsubishi Hitachi Power Systems) from Taiwan, etc.

On the other hand, CFB (circulating fluidized bed) boiler has been developed and commercialized originally by

Western companies, such as Foster Wheeler and Lulgi as two large companies, as well as Kvaerner, Battelle, and

Germany Babcock Wilcock etc.

Japanese companies are also manufacturing CFB boiler by receiving technical assistance from companies in

Europe and the United States. Major Japanese companies are Sumitomo Heavy Industries (technology partner:

Foster Wheeler), Mitsubishi Heavy Industries (same: Lulgi), Mitsui Engineering & Shipbuilding (same: Battelle),

FJK (same: Stein Mueller), etc.

Orders received by world two major companies (Foster Wheeler, Lulgi) for 1985-2006 years (amount of

173

evaporation 150t / h or more) is totally 116, while four major Japanese companies recieved 20 orders (amount of

evaporation 150t / h or more) from 1989 to 2007.

In this way, received orders of Japanese companies is less compared to two large companies overseas, recently,

such as orders for CFB coal-fired the Sumitomo Heavy Industries utilizing the low-goods coal from Antam in

Indonesia in 2013, steadily It has been active, according to the expert hearing, there is a reputation for technical

reliability of the height of Japanese companies.

3) Operation and management of the facility

JBIC is, as a general condition of overseas investment finance, the O & M of the power plant, Japanese

companies are seeking that the conduct (including or Japanese companies (AGC / ASC) is a local company that

credible that you can control).

Candidate of Japanese companies doing O & M are Japanese trading companies, power companies, include the

Heavy manufacturer based plant service companies.

Tab.8- 1 envisioned project scheme

発電会社（SPC)

売電先（PLN）

売電先（ASC）

JBIC

融資出資日本の銀行

海外の銀行等

日本企業（商社、電力会社等）

日本企業（AGC）

海外電力系投資会社

現地企業

設計・調達・建設（EPC）

運営・管理石炭の供給

プロジェクトコーディネータ（商社等）

製造（メーカ）

投資保険

NEXI

Note: Shaded part of the orange: Areas involved is expected of Japanese companies or Japanese companies.

Light blue shaded part: Japan's public institutions.

174

(2) Superiority of Japanese companies during the project implementation

(technical, economic)

1) Technical Superiority

Japanese companies, for supercritical pressure power generation equipment and CFB power plant, in technical,

I is thought to maintain the superiority against foreign companies.

Has been to form a technology related to critical pressure / CFB power generation in strict environmental

standards for many years in Japan, the art of power generation facilities by Japanese companies is at a high level

in the world, and has a rich delivery record.

Although the cost there is a competition with Asian companies, trust in the Japanese companies in the

technology surface is maintained.

In Japan, it is necessary to satisfy the stringent environmental standards than Western for regulations such as

local governments to define separately, this for power generation technology I said to mature.

Domestic power generation technology, not only in plant performance, operation and maintenance technology

and advanced automation operation and high capacity utilization is also in high art in the world. Japanese

companies, by corresponding to customer requirements have established the operation and maintenance support

system.

The Japanese company is able to utilize the good software technology, we propose a system infrastructure

competitive.

Japanese companies, has an excellent competitiveness in the field of environmental load reduction and energy

conservation. In particular, against the background of the technical capabilities that we have developed in

response to a major customer power company in the domestic market, and have been successful in obtaining a

high trust from overseas customers.

2) Economic superiority

a) The loan limit for coal-fired power plant

In public institutions of Europe and the United States, has spread the movement to limit the public financing

assistance to coal-fired power plants.

① President Obama Climate Change Action Plan

· June 25, 2013, President Obama announced "the President climate change action plan." Regulations as follows

for US initiatives against challenge of climate change.

· US government public support of the end for the coal-fired new overseas. However (a) economical alternative

means maximum efficiency of coal-fired technology in the absence of the poorest countries, or (b) if you want

to introduce a carbon dioxide separation, capture and storage (CCS) technology is excluded.

- For other countries and multilateral development banks, I will seek as soon as possible similar take action.

175

② Impact of Obama Action Plan

A. US

· US Treasury announced a "guidance for the US position on MDB involvement in coal-fired in developing

countries" in October 2013. (CO2 emission standards in financing requirements for new coal-fired plant

(500g-CO2 / kWh), CCS introduction request, etc.)

· US EXIM also new lending guidelines announced along the December Obama action plan.

· Conducted call also to other countries, the Nordic countries in September (Denmark, Finland, Iceland, Noruuei,

Sweden) and the joint statement issued in accordance with the new coal-fired for public financial assistance

canceled overseas jointly. The United Kingdom also expressed their agreement in November.

B. MDB (Multilateral Development Banks)

The World Bank Group in July, the energy sector in support policy, new loans to coal-fired other than coal

economical choice strict lending policy announcement that only if there is no.

· EIB also in July, (emissions per unit basis introduction of 550gCO2 / kWh) fossil adopted the selection and

evaluation criteria of fuel power generation projects, including the stringent lending conditions to the new

firepower.

· EBRD also in December, adopted a new lending policy relating to energy project (other with the exception of

the extremely rare cases, such as there is no choice of economically alternative energy sources, does not

perform the new coal fire support).

After a review of the JBIC, it was found that the above motion is directly limited to the export financing (export

credit). The handling of coal-fired in export credit, currently have been conducted to examine towards the revision

of the OECD export credit guideline (arrangement), it is expected that conclusion comes out in about a year. If the

ball lands in conclusion, the Japanese government and JBIC will basically follow this guidline.

On the other hand, investment finance is a different world from export finance, and the direct impact of the

Obama initiative is small. They said that there is no particular problem regarding the investment finance for

super-critical pressure (SC) and CFB. However, they said that more high efficiency for CFB will be preferred.

Whether this trend is to expand how the future, there is a continuing need to perform the attention.

However, amid the surge energy demand mainly in developing countries future, supply is stable, the country to

select the excellent coal-fired power generation in the economy as a national plan many, further expansion of coal

use is expected. For this reason, there is also energy situation of developing countries countries, the close the

option of introducing a coal-fired I considered difficult.

In Indonesia, has serious power supply and demand problem due to a lack of power supply, the construction of

coal-fired power generation using a rich coal of domestic, it is promoted by citing the country.

On the other hand, in order to obtain an understanding of investors and lending institutions to SPC also, with

high efficiency, low carbon emission type as much as possible, it may be desirable to introduce friendly coal-fired

to the environment.

176

b) Efforts of Japanese government and governmental agencies

The Japanese government, sing infrastructure system export support and strategic economic cooperation,

including the coal-fired power plants, infrastructure systems overseas orders of Japanese companies (including the

amount of revenue by business investment), and about 30 trillion yen in 2020 goal that has been set.

The Ministry of Economy, Trade and Industry, for orders promotion of individual projects, from the stage of

project identification through to finance stage, in order to implement a consistent support, you are strengthening

the cooperation with institutions with specific economic cooperation tool.

JICA also in October 2012, in addition to private companies overseas investment function to perform support

by investments and loans to projects implemented, was resumed in about 10 years in the developing world, in

cooperation with the Government of Indonesia, Indonesia I'm working on a project to disseminate high-efficiency

coal-fired power generation technology to.

In this way, the Japanese government has been working on infrastructure system export support by raising the

country, including the financing side, it is believed that in the reassuring also for the present project.

177

(3) Measures necessary in order to facilitate the orders of Japanese

companies

This project is aimed at the composition of the business projects that utilize JBIC project finance.

In public institutions of Europe and the United States, has been out a move to limit the export financing

assistance to coal-fired power plants, the finance of rise from emerging countries such as China are expected. This

project is not intended to deny the investment from these emerging countries.

Japanese companies are doing efforts toward low-carbon through the dissemination of technologies such as

supercritical coal-fired power plants. On the other hand, Asian manufacturers such as China, South Korea, Taiwan

are enhancing cost competitiveness.

For this reason, in order for technology capability of Japanese companies to contribute to the relaxation of

Indonesia's power supply and demand problem, public support by JBIC, JICA, NEXI etc. is necessary and

essential.

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