Reuters reported that PT Paiton Energy an Indonesian independent power producer has agreed to buy 3 million tonnes of coal from PT Adaro Energy Tbk and PT Kideco Jaya Agung at a recent tender.

PT Paiton Energy runs Paiton I power plant in East Java which has generating capacity of 1,230 MG. It opened the tender in early August to seek coal for its Paiton 3 expansion project.

The source said that PT Adaro Energy will supply 2 million tonnes per year of coal of 5,000 kcal per kilogram gross as received at USD 57.5 per tonne FOB basis. PT Kideco in which PT Indika Energy Tbk has a 46% stake will supply 1 million tonnes per year of coal of 4,900 kcal per kilogram GAR at USD 55.20 per tonne FOB.

Coal tenders by independent power projects must be approved by state electricity firm PT Perusahaan Listrik Negara which is a monopoly power supplier in Indonesia and operates 25,000 MW of capacity.

He said that "The deal is in the process of approval by PLN. The coal will be supplied in 2011.”

The Paiton 3 expansion project is developing 815 MW coal fired power plant that is scheduled to start operating in early 2012.

Paiton Energy said in its tender announcement that the coal will be supplied for 5 years with up to 3 further terms of 5 years each at Paiton Energy's sole option.

Paiton Energy's expansion project will be part of the Phase II of the government's crash program to increase generating capacity in a bid to ease the country's chronic power shortages. The government launched the Phase I of the program to add 10,000 MW generating capacity from 35 new coal fired power plants which are mostly still under construction.

(Sourced from Reuters)