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Jakarta Post

Government to set new coal price formula next week

  • Viriya P. Singgih

    The Jakarta Post

Jakarta   /   Tue, February 20, 2018   /   06:10 pm
Government to set new coal price formula next week Freight trains transport coal in this undated file photograph. (

The Energy and Mineral Resources Ministry plans to introduce a new price formula for domestic coal sales by next week at the latest, despite the ongoing disagreement between state electricity firm PLN and local coal miners.

Since earlier this month, the ministry has been in discussion with PLN and local coal miners regarding the new price formula for coal supplied to PLN under the domestic market obligation (DMO).

The new formula is needed to help ease PLN’s financial burden amid increasing global coal prices. Coal accounts for more than 57 percent of PLN’s electricity supply costs (BPP), meaning that every increase in global coal prices will be a major blow for the company.

The ministry's mineral and coal director general, Bambang Gatot Ariyono, said his side was still evaluating all its options.

“There has been no final decision yet, but the deadline is next week,” he said on Tuesday.

PLN spokesperson I Made Suprateka said the company had proposed to the ministry to provide a special price of US$65 per ton for coal supplied under the DMO, or $20 below the proposed price from the Indonesian Coal Mining Association (APBI) of $85 per ton.

“For us, the rate of $65 per ton is a win-win solution for all; it will not be burdensome for PLN,” Made said.

The Asian benchmark for Newcastle thermal coal had gradually increased to $106.78 per ton by January, after falling to as low as $74.52 per ton in May 2017. (bbn)