Coal news and updates

Indonesia aims to set up coal levy agency by June

Indonesia’s government aims to establish a “special entity” by June to help secure coal supplies for the state power utility company and collect levies, energy minister Arifin Tasrif told parliament on Wednesday.

Following a coal supply crunch at the start of the year that was blamed on miners’ poor compliance with a domestic sales requirement, a senior cabinet minister had proposed forming an agency to collect levies and using that revenue to help the utility PLN pay for its coal needs at market prices.

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Since then, however, the government and a parliamentary committee have agreed that PLN will continue to buy coal at a maximum price of $70 per tonne.

“There are a number of schemes and programs being discussed, but the main point is several big miners will be assigned to supply the coal (to PLN) and the price gap would be paid by the levy,” Arifin told parliament members on Wednesday.

Indonesia requires coal miners to sell 25% of their output to the domestic market at capped prices to help the government control energy prices at home. However, miners’ compliance with that rule deteriorated after global coal prices surged and they preferred to export their supplies instead.

Indonesia banned coal exports in January and set stricter rules for the domestic sales requirement.

Arifin told parliament on Wednesday the size of levies imposed on coal miners would depend on the size of their operations and other specifications, while other details on implementation were still being discussed.