PLN won?t apply ?cost-plus? price scheme for coal-fired plants next year

State-owned electricity firm PT PLN said that it was still in the process of discussing a proposal from the Indonesian Coal Mining Association (ICMA) to apply a cost-plus margin price scheme in the purchase of coal for coal-fired power plants, but quickly said that even if it agrees to the proposal it would not apply the pricing formula next year.

?There will be no ?cost-plus? pricing next year,? PLN President Director Sofyan Basir told thejakartapost.com on Wednesday.

The Ministry of Energy and Mineral Resources has recently issued a new policy on price scheme of coal for mine mouth power plant with margin cost set between 15 percent and 25 percent, down from the previous 25 percent.

ICMA, with members producing over 80 percent of the country?s annual coal production, has repeatedly called on the government to apply a special pricing scheme of production cost plus margin for coal used in coal-fired power plant project to help ensure the sustainability of long-term supply.

ICMA study previously found the current drop in coal price has discouraged many miners from carrying out exploration activities to find new reserves, putting at risk future supply of coal for domestic power plants. (*)