Indonesian electricity rate surging along with coal prices

Surging coal prices is threatening PLN as it would increase operational costs and affect the electricity tariff rate.

“Increased coal prices hugely influence PLN's operational costs. We have to buy coal at international market prices although Indonesia is among the largest coal producers in the world,” Perusahaan Listrik Negara president director Dahlan Iskan said.

The Indonesian Coal Mining Association forecasts that domestic coal consumption may reach 78 million tons in 2011, according to the Jakarta Post. Of that amount, 50 million tons of coal will be utilized to fire PLN's power plants across the country.

According to the Oil and Gas Directorate General at the Energy and Mineral Resources Ministry, the coal reference price stands at US$112 per ton, up 8.6 percent from $103.41 per ton in December.