MEMR to set coal price for coal-fired power plants

The Ministry of Energy and Mineral Resources (MEMR) is said to be drafting a new ruling on price of coal dedicated for domestic coal-fired power plants under the so-called Domestic Market Obligation (DMO) of coal miners, news portal kontan.co.id reported on Wednesday.

Kontan said that the price of coal for coal-fired power plants will be set based on the formula of production cost of coal producers plus 15-25 margin.

Head of the Bureau of Communication, Public Information, and Cooperation at the ministry, Dadan Kusdiana confirmed the planned new regulation, but declined to provide further comments as it is still being drafted.

Director General of Electricity at the ministry, Andy N. Sommeng said that the new regulation is being drafted following request made by state-owned electricity firm PT PLN, the largest coal consumer in the country. ?There has been request from PLN to set a special price of coal for the company,? he said.

Head of Corporate Communication at PLN, I Made Suprateka confirmed the company has made the request so that coal price for its power plants would no longer fluctuate following market price development in a bid to help lower electricity tariff. He said that coal currently accounts for about 50 percent of fuel source for its power plants.

Executive Director of the Indonesia Coal Mining Association (APBI) Hendra Sinadia said that the cost plus margin scheme is actually good for coal miners at a time of low coal price. . APBI welcomes the new policy to be applied for long-term coal supply contracts of 20 years, but is concerned of PLN unilaterally demands for price renegotiation when coal price falls.(*)