Govt to revise coal price formula for mine mouth power plants

The government will revise the coal price formula for mine mouth power plants amid the lingering drop in the price of the commodity, Bisnis Indonesia reported on Thursday.

The paper quoted Director for Coal Management and Development at the Ministry of Energy and Mineral Resources Adhi Wibowo as saying that the current pricing system, which is based on a formula of production cost plus a 25 percent margin, is seen to no longer suitable with the current coal price condition.

?So later, the 25 percent margin will be treated as the upper range. Companies (miners) can propose margins of 20 percent or 15 percent,? he said, adding that this would allow coal miners to be able to be more competitive in providing the commodity for mine mouth power plant projects.

Adhi said that the current 25 percent margin is seen to be too high given the current weak coal price environment.

Another area of revision will be on production cost, in which the government will impose an upper limit on cost. (*)