By Fransiska Nangoy
JAKARTA (Reuters) -Indonesia will start using its government-set benchmark coal price as the floor price for transactions starting next month, a senior official at the Energy and Mineral Resources Ministry said on Wednesday.
Indonesia currently uses the government benchmark price, known as the HBA, to calculate royalty fees for coal miners.
Energy Minister Bahlil Lahadalia said earlier this month the government would require coal companies to use the HBA as the benchmark for global transactions, as the government seeks to have more control over the prices of the nation’s coal.
“It will be implemented from March 1,” ministry official Tri Winarno said in a text message to Reuters, without elaborating further on the details of the policy.
According to an online briefing with coal miners, ministry officials said the government will set the prices twice a month under the new HBA scheme to reflect more updated pricing conditions, instead of the current practice of once a month.
The government will set the new prices every first and fifteenth day of the month, officials at the briefing said.
The government sets the HBA based on recent prices reported by coal miners to the government for their royalty fee filings.
In February, the government set the HBA prices between $34.38 per metric ton for the lowest grade and $124.24 for the highest grade.
Transactions for the so-called domestic market obligations will continue to be capped at $70 per metric ton for electricity needs and $90 for some industry needs, according to the briefing with miners.
The exporters are allowed to honour prices stated in their ongoing long-term contracts with buyers, but the government expects companies to make adjustments should their contracts allow it.
Traders have said previously that buyers and sellers would likely prefer to continue using the ICI coal price index, as the HBA often lagged in data and timing.
The government is finalising details on the supervisory mechanisms for the policy and sanctions for those violating the rules.
(Reporting by Fransiska NangoyAdditional reporting by Colleen Howe; Editing by John Mair, Shreya Biswas and Vijay Kishore)
