MEMR fails to complete revision of coal price formula

The Ministry of Energy and Mineral Resources (MEMR) has failed to meet the October deadline in completing the revision of the government?s coal reference price formula (better known under its Bahasa acronym of HBA).

?We want the formula to reflect the Indonesian coal price, not to be overprice or too low,? said Adhi Wibowo, Director of Coal Management and Development at the Directorate General of Mineral and Coal, MEMR, on Thursday. ?A slight delay is okay.?

The ministry initially targeted to complete the revision of the HBA formula in September, and made a second deadline of October. The government sets HBA every month.

As has been reported previously, the ministry is seeking to revise the HBA formula so that it would no longer be heavily influenced by external factors considering that Indonesia is a major coal exporter and producer of particularly low rank coal.

There will be a number of changes to the HBA formula. The first is that the weighting of the indices in the HBA will be revised, increasing the weighting of the Indonesia Coal Index (ICI) from the current 25 percent, and reducing the other indices including Index Platts59 (now 25%), New Castle Export Index (25%), and New Castle Global Coal Index (25%).

The coal calorie benchmark used in the formula, currently 6,322 kcal/kg GAR, will also be revised to better reflect Indonesia?s coal qualities. There are two options: using calorific value of 5,800 kcal/kg or 4,200 kcal/kg. The latter is considered more ideal as it reflects Indonesia?s dominant coal quality: low CV coal. (*)