Coal miners insist hefty margin in coal supply for power plants

Minister of Energy and Mineral Resources Sudirman Said is currently in the process of revising Ministerial Regulation No 10/2014 on coal price for mine mouth power plant in a bid to provide greater room for state-owned electricity company PT PLN to negotiate coal price for mine mouth power plants, Kontan reported on Friday.

Under the current ruling, the coal price for mine mouth plants is set at production cost plus 25 percent margin. But Head of Coal Division at PLN, Harlen was quoted by the paper as saying that the 25 percent margin is quite huge considering the current declining trend in coal price. He said that PLN wants coal miners to lower the margin.

Executive Director of the Indonesia Coal Mining Association, Supriatna Suhala said that the acceptable margin is between 10-25 percent. He said that if the margin level is less than 10 percent, it would not attract coal miners to supply coal to the mine mouth power plant projects. He argued that there?s no reason for the miners to dig for coal if they could invest their money in banks for a 10 percent interest rate. (*)