Indonesia's Ministry of Energy and Mineral Resources (ESDM) has officially revised the formula for coal reference price (HBA) as stated in the Decree of the Minister of Energy and Mineral Resources concerning Guidelines for Setting Coal Benchmark Prices.
This move is seen as a breath of fresh air for coal entrepreneurs, as the new HBA formula sets a more realistic coal price than the previous one.
Idris Sihite, acting director general of ESDM's Mineral and Coal department, said the new HBA formula was compiled based on real transactions with existing data in e-PNBP (Non-Tax State Revenue).
He added that the new formula seeks to ensure fairness for both the state and coal companies in Indonesia, as the HBA is calculated from actual PNBP transaction data.
Previously, PTBA Main Director Arsal Ismail explained that the new HBA formula would have an impact on determining a fairer coal royalty for both the government and companies.
The new HBA formula takes into account requests from business actors, as the previous formula was used based on four global indices (Indonesia Coal Index (ICI), the Newcastle Export Index (NEX), the Globalcoal Newcastle Index (GCNC), and Platts) with a weight of 25% each, creating a huge spike in HBA prices and a low selling price.
The new formula takes into account 70% of the average coal selling price in the preceding month and 30% of the average coal selling price two months before. This way, the selling price and HBA are not too far apart, creating fairness for both the government and companies.
(Writing by Alex Guo Editing by Harry Huo)
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