New HBA formula expected to be applied this quarter
Tuesday, January 26 2016 - 02:57 AM WIB
The Ministry of Energy and Mineral Resources is still in the process of reviewing the proposed changes into the government?s coal reference price (better known as HBA) formula.
Director of Coal Management and Development at the ministry, Adhi Wibowo said on Monday that the target now is for the new HBA formula to be effective in the first quarter of this year. ?It?s still being reviewed, so in the meantime the old formula is still applied,? he said.
Adhi said in December of last year that the ministry has completed the revision of the HBA formula, and expected to implement it in January.
Under the new formula, the weighting of the Indonesia Coal Index (ICI) is increased from 25 percent to 50 percent, while the weighting of two other indices New Castle Export Index and New Castle Global Coal Index, are each maintained at 25 percent. The Platts59 Index is no longer used in the new formula as it doesn?t reflect the price of the majority of Indonesia?s coal output, which is low to medium calorie coal.
The government hopes that the new formula will help increase the price of coal produced by the country, the world?s largest exporter of thermal coal, as it would be less influenced by international factors. Experts, however, said that new formula would have little effect in increasing the coal price as it is affected by supply and demand factor. The global coal market is currently in an oversupply sand weak demand situation.
Editing by Reiner Simanjuntak