Government to set new coal price benchmark

The government will issue a price benchmark for coal, which is expected to become a reference for sellers and buyers to set price on the domestic market.

?The benchmark will be issued in the form of ministerial decree. It will be issued later this year and will be revised every month,? said Bambang Setiawan, Director General of Mineral, Coal and Geothermal at the Energy and Mineral Resources Ministry.

He said that his office was drafting the pricing formula to ensure that the domestic coal price would not be way too low compared to the price on the international market.

?There is a suggestion that the coal price for domestic market should not be higher than the lowest price in the international market,? he said.

He said the pricing formula would not be similar to those issued in the international market. It could also be different from the Indonesian Coal Index (ICI) issued by the association of Indonesian coal producers.

?We shall have our own benchmark. What is clear is that we shall always look at the international price for comparison," he said.

He further said the ministry had allowed 39 coal companies to renegotiate with local buyers on price following the sharp rise in the price of the fuel on the international market.

The ministry has allowed the companies to temporarily suspend the shipment until after they reach an agreement on the new price with the buyers.

He refused to identify the 39 companies, saying he did not remember their names.

Meanwhile, Bambang Gatot Aryono, Director of Mineral and Coal Business Supervision, said the ministry had allowed 6 companies to suspend their coal shipment until after they reach an agreement with buyers on new price. They are PT Antang Gunung Meratus, PT Tanjung Alam Jaya, PT Sumber Kurnia Buana, PD Baramarta, PT Kadya Caraka Mulia dan PT Bangun Banua Persada.

Based on contracts, they sell their coal at an average price of $34 per ton, while based on ICI, the price now stands at $85 per ton for coal with a calorie content of 5,800 and $90 per ton for coal with a colorie content of above 6000.

Bambang said that the government would also issue a regulation which would determine the percentage of coal production that should be sold to the domestic market.

?The regulation is being drafted and will be issued this year so that it can be implemented next year,? he said, adding that the percentage of the coal miners? production that should be sold in the domestic would also be adjusted every year, depending on the demand. (godang)