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Government told to carefully decide on domestic coal price
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A Bukit Asam coal-fired power plant in Muara Enim, South Sumatra. (Antara/ Zabur Karuru)
T
he Indonesian Geological Experts Association (IAGI) has urged the government to not hurriedly decide on domestic coal prices under the domestic market obligation (DMO) as a mechanism to help curb electricity rates, as demanded by state-owned electricity company PLN.
IAGI chairman Singgih Widagdo said the separation of domestic and international coal prices was related to the country’s long-term energy vision.
He added that the decision on the coal DMO should include the Energy and Mineral Resources Ministry, the Finance Ministry and regional administrations, as well as coal investors.
“So, the Energy and Mineral Resources Ministry should not decide the DMO only based on the increase of primary energy costs,” Singgih said in Jakarta on Tuesday as reported by kompas.com.
Singgih said the association appreciated that the government had decided the coal reference price (HBA), including the obligation of coal miners to pay royalties to the state before they sold the commodity to a third party.
Singgih said the separation of domestic and international coal prices was not only a matter of economic consideration, but it related to the way the government managed natural resources for the interest of the people.
PLN previously proposed a special coal 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.
Coal accounts for more than 57 percent of PLN’s electricity supply costs, meaning that increases in global coal prices will be a major blow to the company. (bbn)
