Indonesia plans to form agency to collect compensations for domestic coal users International,  Thermal Coal 2022-06-29 15:37:36

The Ministry of Energy and Mineral Resources (ESDM) is on course to set up a coal special entity or public service agency (BLU) in July to collect fees for domestic power plants owned by state-owned group PLN after the domestic deliveries will be priced as per a market mechanism instead of a fixed price of $70/t.

Once the domestic coal price is left to the market mechanism, the BLU will collect fees to compensate PLN power plants. The BLU fees refer to the difference between the market price and the fixed $70/t.

The formation of BLU was initially proposed in early January this year when Indonesia struck in a supply shortage forced coal miners to deliver coal to the domestic given that miners preferred to sell coal globally for higher profits.

Coal fees will be levied equally to all coal miners. "Everyone is obliged to 25% of the Domestic Market Obligation. There is no special appointment. Everything must be required by law," said Irwandy Arif, Special Staff of the Minister of Energy and Mineral Resources for the Acceleration of Mineral and Coal Governance.

Once the BLU is set up, all prices of domestic supply will apply in accordance with the market change reflected by certain indexes. "And then the difference after the index price will be returned to the company (PLN)," he said.

The collected funds will be disbursed to PLN to assist the state-owned electricity company in ensuring purchases in the market.

"The coal BLU is to ensure the supply of coal is guaranteed, so that electricity will be maintained properly. Then, it is also intended to avoid the risks that may exist in the future," Febrio Kacaribu, Head of the Fiscal Policy Agency (BKF) of the Ministry of Finance, said.

(Writing by Alex Guo  Editing by Tammy Yang)
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