Bukit Asam entered oil and power plant business.
Written by: Revi Yohana Simanjuntak
PT Tambang Batubara Bukit Asam Tbk (PTBA) is always identic with coal business, but in the future this state owned enterprises (BUMN) company will also be famous as an oil and power plant company. This has been pioneered since the mid of this year. PTBA started to make these new businesses along with the decreases of coal business. In these three years the price of coal is decreasing 50%. “This condition is affecting the company economic situation. Moreover, some companies make losses,” Secretary of PTBA, Mr. Joko Pramono said. In 2011, PTBA gained Rp 3 trillion net, but last year PTBA could only get Rp 1,8 trillion. Therefore, the company started to think about some new business fields that are still related to coal. PTBA is concerned to start business of producing crude-oil which is processed from coal. Mr. Joko thought that this idea appeared because of the low price of low-calorie coal, around US$ 20 up to US$ 25 per ton. PTBA has a lot of reserve low-calorie coal; 48% from 7,3 billion tons of reserve coal is low-calorie. Mr. Joko said,“We need added value technology to increase low-calorie coal sale value.” PTBA is planning to process this low-calorie coal into synthetic crude oil. The technology to process coal into crude oil was actually already exist since 1996, but at that time, this kind of technology is not efficient, because it has gasification process (coal convention into gas in order to change it into crude oil. Starting from 2012, PTBA was interested in using Catalytic Hydro- Thermal Reactor (Cat-HTR) technology which is patent by Ignite Energy Resources Ltd from Australia, so that the process will be much easier. In the mid of this year, PTBA also sent their product for trial. Agency for the Assessment and Application of Technology (BPPT) also invited to get involved in this product research. According to the result of trial, Cat-HTR technology produces two products; synthetic crude oil and high-calorie coal. 2,9 tons of low-calorie coal can produce approximately 1 barrel of high-calorie metallurgy coal (7,500 calories). If five million tons of low-calorie coal is sold US$ 30 per ton, the income is only US$ 150 million. Otherwise, if it is processed and added value, it will produce 1,7 million barrel of oil and 1,1 million tons metallurgy coal. The income will be US$ 300 million, if crude oil price is US$ 1 million per barrel and metallurgy price is US$ 120 per ton. Those considerations made PTBA bold enough to get in to crude oil production business by planning to acquire Ignite Resources. Mr. Joko said, “Right now we are entering the last step of due diligence.” Consideration in acquiring Ignite is a very expensive coal utilizing technology. We have to buy the license from the owner, if we want to use it. Whereas, the reserve coal which is going to be utilized by PTBA is very much and it may waste a lot of time. Besides that, Ignite has 16 billion tons reserve coal. “To develop our own technology is difficult and expensive enough. Acquiring is the fastest way to have control that technology,” he added. The process of turning coal into oil has been started. Now, there is 250,000 tons coal which is already processed into oil and will keep increasing in the coming days. Mr. Joko said that PTBA has a target to sell 1 million to 1,5 million tons of utilizing coal in the coming year 2018 and increasing up to 5 million tons in the year after that. They consider market response in developing this program. PTBA is planning to reach domestic target considering the high need of oil in this country, but the reserve is keep decreasing. Mr. Joko stated, “We don’t have to be worried, considering the market potential. If the target market is widely opended, then the marketing wouldn’t be too complicated.” He valued that synthetic crude oil has the same price value as crude oil, because both contain chemical substance that are almost similar and the uses are also the same. Moreover, Joko claimed that synthetic crude oil produced by PTBA will contain lower sulphur substance. There are also no many changes in company management, regarding the production of synthetic oil will be done in Australia until 2018. Numbers of PTBA technician were sent to Australia to learn Cat-HTR technology. The technology will be carried to Indonesia, if the coal commercial process has already done, so that it will be more efficient.
The second business of PTBA is power plant. PTBA is planning to start steam power plant operation (PLTU) Mulut Tambang in the end of this year. The capacity of the power plant is 2x100 megawatt (MW). This company also got involved in PLTU Mulut Tambang Sumsel 8 tender with the capacity of 2x610 MW, which hopefully will be operated in the end of 2017. Besides that, PTBA also hope to win PLTU Mulut Tambang 9 and 10 tender with the capacity of 1,800 MW. In fact, PTBA has already operated PLTU Mulut Tambang since 2012; 30 MW is used for PTBA and 16 MW to support the electricity needs in Tarahan Port. Besides developing in power plant field, operating own PLTU is also done for the company’s efficiency. In the coming year 2018, PTBA aimed to operate PLTU WITH approximately 1,500 MW. Joko is optimistic that this business will be more developed as well as oil business. On the other hand, coal business will keep operating by selling mid and high-calorie coal. Those positive missions are starting to bring income. In the first semester 2014, PTBA income increases 18% and net profit increases 33% from the same period in the year before that. This company hoped that those positive things will be stable. PTBA is no longer depending to coal business. Mr. Joko stated, “We hoped that we will reach our goal to be the world class energy company in coal, oil and power plant businesses.”
Creating Urgency Step Atmosphere
PT Bukit Asam Tbk (PTBA) in entering into the field of oil and power generation business is the scenario planning strategy introduced by management expert, Peter Schwartz. This scenario is a consistent image about the various possibilities on conditions that may occur in the future, based on the identification of the existing conditions and problems. Management and marketing observer, Mr. Daniel Saputro, also assess, that it is the right step for PTBA’s strategy to plunge into other businesses when the current coal prices really decreased. However, while changing the direction of the business, Daniel suggested that PTBA also change the management, such as building awareness of its employees to change and creating an atmosphere of urgency in order to get ready to chance. Because, if not conditioned like that, the changes will be slow. Daniel explained, “Due to the changing external conditions, the internal people must change as well. There must be new person and new generation, so there should be a management change.” He also suggested the making of guiding team or change agent. Change agent appointed to motivate employees to make changes. In addition, management must make a new road map and operational standards as well as KPI standards. PTBA can also see the assets of the unemployed in order to make them more productive.
Source: Tabloid Mingguan Kontan, page 27, 6-12 Oktober 2014 edition
