JAKARTA, Feb 26 (Reuters) – Indonesia will begin using its government-set benchmark coal price as the minimum price for transactions from March 1, a senior official from the Energy and Mineral Resources Ministry confirmed on Wednesday.
Currently, Indonesia uses the benchmark price, known as the HBA (Harga Batu Bara Acuan), to calculate royalty fees for coal miners. Energy Minister Bahlil Lahadalia announced earlier this month that coal companies would be required to adopt the HBA as the standard for global transactions. This move is part of the government’s strategy to increase control over the nation’s coal prices.
The policy will take effect from March 1, according to ministry official Tri Winarno, who provided the update via text message to Reuters, though no further details were given.
In an online briefing with coal miners, ministry officials explained that the government will now set the HBA price twice a month, rather than the current once-a-month schedule. The new prices will be announced on the 1st and 15th of each month to reflect more up-to-date market conditions.
The HBA is determined based on the prices coal miners report to the government for royalty fee calculations. For February, the government set HBA prices ranging from $34.38 per metric ton for the lowest grade coal to $124.24 per metric ton for the highest grade.
Under the new policy, transactions for the domestic market obligations (DMO) will continue to have price caps: $70 per metric ton for electricity generation and $90 for certain industrial needs.
Exporters will still be allowed to honor the prices outlined in their existing long-term contracts, but the government expects companies to adjust prices when their contracts permit.
Traders have noted that buyers and sellers may prefer using the ICI (Indonesian Coal Index) as a reference, as the HBA sometimes lags behind current market data.
The government is finalizing the details of how the policy will be supervised and what penalties will apply for non-compliance.
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