PLN changes coal supply tender rule

State electricity firm PT PLN (Persero) said it has amended its coal tender ruling to adapt to the coal benchmark price regulation which was issued by the government in september 2010 to ensure royalty collection.

?We have adopted new tender policy in which bidders will exclude royalty component in price they submit. PLN will then shoulder the winners? royalty obligation to the government? Nur Pamudji, PLN?s Director in charge of fuel procurement said on Wednesday. Coal miners which operate under Coal Contract of Work (CCOW) pay royalty of 13.5% while those operating under mining license (IUP) pay between 3-5%.

"This new tender ruling will also ensure fairness as both CCOW and IUP miners will be competing on level playing field as the royalty factor (which burden CCOW and IUP differently) has been taken out of the pricing determination," he said.

Pamudji said PLN has applied the new ruling on PLN?s latest long-term tender and on several spot tenders.

Under the benchmark price regulation, coal miners are obliged to pay their royalties based on or above coal benchmark price which is updated monthly by the government based on international price movement. (bernard)