Minister revises regulation on coal price for mine mouth power plant

Director General of Mineral and Coal at the Ministry of Energy and Mineral Resources, Bambang Gatot Ariyono, said that his office has completed the revision of Ministerial Regulation No 9/2016 on mechanism to determine coal price for mine mouth power projects.

?It (the revision) has been completed, waiting to be signed by the minister,? he told Kontan on Monday, but could not say when interim Minister of Energy and Mineral Resources Luhut B. Panjaitan will sign into the new regulation.

The Ministerial Regulation No 9/2016 sets the price margin of coal dedicated for mine mouth power plant projects at 15-25 percent, down from previous margin of 25 percent. The coal price for mine mouth power plant projects is set based on a formula of production cost plus margin. The regulation was issued in April in response to request from state-owned electricity company PT PLN, which protested the high margin amid the current drop in coal price. PLN, however, insists that the margin set under the Regulation No 9 remains high.

Minister Luhut was quoted by Kontan as saying that under the revised new ruling, the coal price dedicated for mine mouth power plant projects will be decided by market mechanism, but quickly added that PLN can?t buy the coal at too low a price. ?We?ll look for the equilibrium,? he said.

Hendra Sinadia, Deputy Executive Director of the Indonesia Coal Mining Association (ICMA) said that during a meeting with the minister last week, the association insisted that the coal price for mine mouth power plant projects must not be too low. (*)