Ministry cancels revision of HBA formula

The Ministry of Energy and Mineral Resources has decided to cancel a plan to revise the existing formula in determining the government?s coal reference price (or better known as HBA).

Ministry spokesman Sujatmiko said on Thursday that the ministry feared that the revision of the HBA formula would create negative sentiment in the coal market, further undermining the price of the commodity.

He added that the change in the HBA formula may be realized once the coal price has stabilized.

Based on an assessment since last year, the planned new HBA formula was supposed to comprise of Indonesia Coal Index (ICI) with 50 percent weighting, New Castle Global Coal (GC) and New Castle Export Index (NEX), each with a weighting of 25 percent. The higher weighting of the ICI was meant for the HBA to better reflect the price of domestic coal.

Under the existing formula, the HBA is calculated based on the development four price indexes including ICI, GC, NEX, and Platts 59, each with equal weighting of 25 percent. (*)