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Jakarta Post

New coal price formula doesn’t apply retroactively: Official

  • Viriya P. Singgih

    The Jakarta Post

Jakarta   /   Tue, March 13, 2018   /   04:46 pm
New coal price formula doesn’t apply retroactively: Official Freight trains transport coal in this undated file photograph. (

The Energy and Mineral Resources Ministry has decided to change the implementation period of the new discounted price formula for coal sold to the domestic market, saying the policy had only taken effect since March 12 instead of the previous Jan. 1.

Through this decision, coal miners do not have to give compensation for state electricity firm PLN and independent power producers (IPPs) regarding the overpayment they made from Jan. 1 until March 11.

The change was made through the issuance of Decree No. 1410/2018 on Monday, a revision of Decree No. 1395/2018 that was introduced on last Friday.

“We made this change to simplify the financial administration report [of all parties involved],” the ministry’s mineral and coal director general Bambang Gatot Ariyono said Tuesday.

Through the issuance of the first decree, the ministry has capped the country’s coal reference price (HBA) used in the formulation of coal selling prices for domestic power generation at a maximum level of US$70 per ton until 2019.

The HBA is an average of four different price indexes coming from the previous month, namely the Indonesia Coal Index for coal with a calorific value of 6,500 kilocalorie/kilogram gross as received (GAR), the Platts Kalimantan for 5,900 kcal/kg GAR, as well as the Newcastle Export Index and the globalCOAL Newcastle Index, both for 6,322 kcal/kg GAR.

The ministry announces the HBA on a monthly basis to calculate the non-tax revenues that should be paid by mining companies and to determine the coal benchmark price (HBP) of all types of coal. (bbn)