Observers Assessing the Pricing of Coal for National Electricity is Realistic

By : Hariyanto And Aldo Bella Putra | Sunday, March 11 2018 - 19:00 IWST

Tambang Batubara (ist)
Tambang Batubara (ist) - Jakarta - Energy economics observer from UGM Fahmy Radhi considers that the government's decision to set the selling price of coal for domestic power plants of US $ 70 per ton is quite realistic.

"The coal price of 70 US dollars per ton is beneficial to both parties, namely PT PLN and coal businessmen," he said in Jakarta, Friday (9/3/2018).

The continued positive impact of coal price fixing of US $ 70 per ton is that the people are not burdened with the increase of electricity tariff until 2019.

According to Fahmy, with coal production cost currently around US $ 35 per ton, the coal businessman still reap the profit up to 100% at the selling price of US $ 70 per ton.

"As for PLN, the purchase price of US $ 70 per ton, can still cover the cost of electricity production, so there is no need to raise electricity tariffs that will burden the people as consumers," he said.

Moreover, he continued, the volume of coal reserved for the power plant is only 25% of the total production. Meanwhile, the remaining 75% of national coal production for export at market price. "It means that the decision of coal selling price of US $ 70 will not harm coal businessman," he said.

Fahmy appreciated the Minister of Energy and Mineral Resources, Ignatius Jonan, who has made the best decision by setting the coal price for the power plant for US $ 70 per ton. "It is not easy to decide the price of equilibrium that does not harm both parties," he said.

ESDM Minister Ignatius Jonan on Friday signed Decree of the Minister of Energy and Mineral Resources No. 1395K / 30 / MEM / 2018 on Coal Prices for Electricity Supply for Public Interest.

In accordance with the new beleid, the government sets the price of coal for domestic power plants at US $ 70 per ton. The coal price of US $ 70 is retroactive from 1 January 2018 to 31 December 2019.

The government sets the maximum volume of coal at a selling price of US $ 70 of 100 million tons per year. The government's decision was taken to prevent electricity tariffs from rising so as to maintain the purchasing power of the people and industry. (Tar)

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