Indonesia Sets Coal Prices for Domestic Power Plants

Indonesia has set benchmark coal prices for sales to domestic power plants at USD 70/MT for coal with calorific value of 6322 GAR, Energy and Mineral Resources Ministry said on its website on 9 Mar’18.

If prices fall less than USD 70/MT, it will use the monthly benchmark coal price, the ministry said.

For coal with other calorific values, prices should be calculated using the benchmark 6322 GAR price of USD 70/MT.

Energy and Mineral Resources Miniser Ignasius Jonan said the measure to set special coal price for domestic electricity  aims at “maintaining affordable electricity tariff for protecting competitive consumers’ and industrial purchasing power.”

The special coal price formula applies retroactively to January 1, 2018 until December 2019. “It means all contracts that have been ongoing since January 1, 2018, need to be adjusted,” the ministry said in the statement.

The Energy and Mineral Resources Ministry sets maximum sales volume for domestic utilities at 100 MnT per year or according to the country’s power plants’ consumption.

Companies which sell coal to domestic power plants may get permission to produce additional 10% of coal if they meet the requirements set by the government.

The special price only applies for sales to the national electricity, while sales for other purpose will still refer to the monthly coal benchmark price.

Indonesian Coal Offers:
Indonesian coal prices have started to soften as a result of the sluggish demand from Chinese buyers. After maintaining stability in Feb’18, coal prices have started to fall in Mar’18.

Offer for 4200 GAR coal was assessed at USD 49-50/MT, FoB Kalimantan; while for 3800 GAR coal it was heard USD 40/MT, FoB Kalimantan.

Market participants, awaiting the return of Chinese buyers post the Lunar New Year holidays, had put their buying on hold. However, as a result of rising domestic production, falling domestic price and warmer weather prevailing across the country, Chinese demand for imported Indonesian coal have been subdued since returning back from the holidays.