Indonesia's coal production increased, prices fell even

Based Futures Trading Supervisory Board report, the price of coal continued to decline since late 2011 to early July 2012. Reference to the price of Indonesian coal power plant with 6322 calories per kilogram, has decreased, for example, in May 2012, the reference price reached 102.12 U.S. dollars, fell to 96.65 dollars in June, and again fell to 87.56 U.S. dollars on July.

Downward trend in coal prices occur, due to overproduction. Productions of coal in January-March 2012 have increased high, compared with same period last year. During the first three months of this year, coal production reached 102 million tones, higher than the same period last year by 90 million tons. Despite declining rates, employers are not cutting production ramped up even more. The rainy season also did not inhibit the production of coal.

The main drivers of this increase in coal production, is more and more countries are to build power plants with coal fuel. Some countries are increasing the demand for China, India, Pakistan, Thailand, and Sri Lanka. China and India consume most.
Indonesian coal exports to these countries respectively 60 million tons this year. As a result, increased demand for coal and domestic coal production is greatly increased.

The Estimated production end 2012, could reach 390 million-400 million tons. These estimates have calculated the mining company's production capability and market demand and price fluctuations due to global crisis. APBI is exceeding projections of coal production projections from the government. As an illustration, this year, the government projected production of approximately 332 million tons of coal. Indonesia's coal production increased, prices fell even

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Negotiate with China on funds, or local banks?

PLN should negotiate with China on funds, or local banks. PT PLN is still facing financing problems with its first 10,000 megawatt (MW) crash program because of the “unsmooth” partnership with the Chinese government as one of its biggest investors, according to President Susilo Bambang Yudhoyono. 

Yudhoyono said Monday he had instructed several Cabinet ministers and PLN executives to discuss and find solutions on this matter, including continuing negotiations with China and finding alternative sources of loans from domestic lenders. 

“Physical construction of the first steps of the 10,000 megawatt crash program has actually run fast, but there are some hindrances here and there due to financing problems,” Yudhoyono told the press after a meeting with PLN executives at the company’s headquarters. 

“I’ve asked related ministries and PLN executives to continue negotiations with China so as to ensure smooth disbursement of the funding. In the event they fail to generate solutions, (I’ve asked them to) use domestic sources more,” he added. 

Yudhoyono said using funds from the local banking sector was the best option, adding he had no plan to suggest PLN seek loans from other foreign sources.  

The 10,000 MW power program was launched in 2006 to meet the increasing demand for electricity nationwide, especially for the Java-Bali system. 

The program included 35 power plants, 10 of them in Java and Bali, while the remaining 25 were off the two main islands. So far contracts for 32 power plants have been signed, and mostof these have now reached the construction phase. 

PLN says the program requires US$8 billion in total, 85 percent of which is expected to come from local and foreign investors and 15 percent of which to be covered by PLN from its own resources. 

PLN’s head of team for the acceleration of the first 10,000 megawatt program, Yogo Pratomo, said PLN had managed to secure Rp 17 trillion ( US$1.45 billion) of investment from local banks and $2 billion in foreign currency, most of which came from the Chinese government. 

Yogo said problems with China regarding financing issues were threatening among others, the planned power plant at Indramayu, West Java, originally scheduled to start operation this year.
PLN said earlier about 1,000 me-gawatts made up of three new plants, including Indramayu, should have commenced commercial operation in 2009, but were now delayed. 

About 7,000 megawatts are scheduled to start operating in 2010, while the remaining 2,000 megawatts are delayed until 2011 and 2012. 

To anticipate increasing electricity demand in the future, the government has been also preparing a second 10,000 megawatt accelerated program, part of which will be directly PLN’s responsibility while the rest will comprise independent power producers (IPPs). 

PLN has said that the tenders for some of the projects in the second program would start to be issued at the beginning of the second half of the year. 

Unlike the first program, which is entirely designated for coal-fired power plants, the second program includes 12 percent of total power generated by hydro plant, 48 percent by geothermal plant, and 14 percent by gas , plus 26 percent by coal. 

The second program is scheduled for completion by 2012.

Souerce: Erwida Maulia , THE JAKARTA POST , JAKARTA | Tue, 02/10/2009 12:51 PM | Business 

jet plane for election campaign

With tight campaign schedules, chartered aircraft is the most effective mode of transportation for political party leaders, at least those that can afford it.

Despite the plunging value of the rupiah, several parties dare to spend extra money to rent private airplanes for campaigning. 

Yahya Sacawiria, head of President Susilo Bambang Yudhoyono’s Democratic Party election team, said the party rented two private planes during the open campaign period between March 6 and April 5.

“One of them is for President SBY and another is for the campaign team. Chartered aircraft is more effective as we have high mobility during the open campaign,” Yahya said. 

Yahya gave no details of the aircraft type or cost. “The party will cover all of the expenses,” he said.

Choel Mallarangeng, Chief Executive Director of Fox Indonesia, a political consultancy firm which is administering the Democratic Party’s campaign, said the campaign team only chartered a private airplane when regular flights were fully booked.

“We don’t choose a specific airline company. It’s just like taxi; we order it only when we need it. Using chartered aircraft is cheaper actually,” Choel said. 

Practicality is also the reason the Greater Indonesia Movement Party (Gerindra) cites for opting for air transport.

The party’s deputy chairman Fadli Zon said Gerindra rented two private jets during the open campaign; one for party’s chief patron, Prabowo Subianto, and the other for advisory board member Hasjim Djojohadikusumo, who is also Prabowo’s brother.

“We rent the private aircraft for 20 days,” Fadli said.

Prabowo took his own private aircraft when he took part in the Golkar Party’s convention to select the party’s presidential candidate in 2004. At that time, Prabowo reportedly rented a Fokker 50 from charter flight company Transwisata Prima Aviation.

Fadli said a Fokker 100 was rented by Prabowo from corporate aircraft operator Premiair. 

The Fokker 100 is a large cabin corporate jet in which the standard 102 seat cabin has been converted in to a VIP and business class cabin with a total of 35 seats. 

Fadli refused to provide details of Gerindra’s aircraft rental, but Fokker 100 operators normally charge its users at least US$4,000 for a Jakarta-Bali one day return flight. Landing fees are excluded in the price.

Golkar has chartered a Boeing 737-300 plane from Sriwijaya Air.

“Actually we rent our aircraft to NAC (Nusantara Air Charter), but the aircraft is likely to be used by Golkar,” Sriwijaya’s public relations manager Ruth Hanna Simatupang said. 

NAC is a chartered aircraft company owned by Solihin Kalla, son of Vice President and Golkar Party Chairman Jusuf Kalla.

According to Ruth, Golkar will rent the aircraft for two weeks and Sriwijaya will provide complete flight services. 

Ruth said this was the first time Sriwijaya had rented one of its aircraft. The campaign season, however, does not impact the chartered flight industry significantly, Pelita Air’s President Director Hariadi Soepangkat said.

“I haven’t seen any significant increase in demand,” he said, adding that Pelita would rely on oil and gas companies to rent aircraft over the long term.

Source: Alfian , The Jakarta Post , JAKARTA | Wed, 03/25/2009 10:10 AM | Election 2009 

Oil, gas firms to invest $14b in 2009

Oil and gas firms have proposed to invest US$14 billion this year, about 15 percent higher than the $13.15 billion calculated last month. 

Last month’s figure was based on submitted Work Program and Budget (WP & B) proposals from the majority of 203 contract holders. More contractors have submitted their business proposals since, says upstream oil and gas regulator BPMigas.

“WP & B consists of the contractors’ projected work programs and their budgets. BPMigas must approve the proposals prior to their execution,” said Achmad Luthfy, BPMigas deputy chair for planning, Sunday, as reported by Antara news agency.

Last year, oil and gas contractors spent $11.5 billion in the sector from January to October. 
He said that approved work programs would be called “Petroleum Operation” and the expenses spent for them called “Operating Cost”.

Luthfy said the higher investment levels would help the country achieve its 2009 oil production target of 960,000 barrels of oil per day (bopd).

The production target is lower than the country’s average last year of 978,000 bopd.

BPMigas Chair Priyono said last month declining oil production by PT Chevron Pacific Indonesia, a local subsidiary of the US’ second largest oil company, was among the reasons for the potentially lower output in 2009. 

Chevron’s oil production makes up around 40 percent of the country’s oil output. 

“Their production is declining because of aging fields. As the company output is very big, about 400,000 bopd, their decline is difficult to set off against finding new fields,” Priyono said.

Chevron recently said its Duri and Minas concessions in Sumatra might only show production of 405,000 bopd last year, lower than the government-targeted 408,000 bopd and far from the 425,000 bopd pumped in 2007.

Priyono said most investment would focus more on production rather than exploration. 

“Exploration activities gave very good results last year. So we expect to see more drilling and other exploratory activities this year,” he said when asked to judge this year’s business prospects as compared to those in 2008.

BPMigas external division head Amir Hamzah said there was a slight difference in how the contractors’ WP & B were arranged compared to previous years.

“Previously we held separate discussions for the Authorization for Expenditure (AFE) and for the WP & B. But starting this year we will discuss both subjects simultaneously in the beginning of the year. This will make for faster approvals on proposals,” Hamzah said.

Hamzah also said that WP & B could function as a pre-auditing tool for the government because its principles cover cost recovery, profit sharing and tax components.

Cost recovery is an incentive mechanism under which the government recovers oil block operators’ spending during exploration only after the block starts producing to bolster investment in the sector.
Source: The Jakarta Post , JAKARTA | Mon, 02/16/2009 11:21 AM | Business