Fluctuation in the coal reference price in Indonesia affects the production costs that PLN, a state-owned company supplying electricity, has to bear in supplying electricity for the public interest. PLN has proposed to the Government that the Government determine a ceiling for the coal sale price, specifically for the supply of electricity for the public interest.

On the other hand, the coal suppliers via the Indonesia Coal Mining Association (Asosiasi Pertambangan Batubara Indonesia), have suggested that if the coal sale price has to be capped, it should be capped at USD 85 per metric ton, although the factors to be taken into account in setting the suggested capped price still need to be further explored. The Minister of Energy and Mineral Resources (MEMR) then took action with a new regulation in early 2018 capping the coal sale price for the supply of electricity for the public interest. What’s in the regulation, does it give assurance for stakeholders, particularly the coal mining companies in respect of the stability of their business and revenues?

Dentons HPRP partner Hendra Ong and associate lawyer Nadya Vera Simanjuntak have prepared an executive summary on the new regulation, which can be downloaded here.

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