PLN demands lower coal margin for mine mouth power plants

State-owned electricity company PT PLN has called for the government to further reduce the price margins in the formula used to determine price of coal dedicated for mine mouth power plants.

PLN Director Sofyan Basir said on Monday that the current margins of 15-25 percent are considered too high given the current weak coal price environment.

While did not disclosing details, he said that the PLN request will be discussed at an upcoming forum to be among others attended by the Ministry of Energy and Mineral Resources, Ministry of Finance, and the Office of the Coordinating Minister of the Economy.

The Minister of Energy and Mineral Resources has already issued Ministerial Regulation No 9/2016, under which price of coal dedicated for mine mouth power plant projects are determined based on a formula of coal production cost plus 15-25 percent margin. This is a revision from the previous 25 percent margin set under Ministerial Regulation No 10/2014.

Meanwhile, Director General of Mineral and Coal Bambang Gatot Ariyono said that is unlikely to once again revise the coal margin for mine mouth power plants.

He said that the current margins are aimed as incentives for coal miners amid the current global weak coal price environment to among others maintain exploration activities to help ensure future coal reserves. ?If we lower (the margins), reserves will deplete. There has to be a (attractive) margin (for coal miners,? he said. (*)