tea Uy aSOPINION By Singgih Widagdo - Indonesian Coal Observer SPECIFIC COAL PRICE FOR DOMESTIC USE, DO WE NEED IT? r hhe government's plan ta stipulate the coal price for domestic use will nat be easy 10 do. Even the debates hhave ove actors in the coal mining industry, but also among vatious parties who have ugreat concems aver the management red, not only among business of the energy in this country. The story ‘might be different ifthe government had already established the domestic coal price when the coal price in the {mernational market is not as high as it Is now. Problems regarding the management of the domestic energy utilization, specilically coal demand, should have been anticipated by the government (the Ministry of Energy and Mineral resources or ESDM) far before the domestic electricity sector experienced the fast growth of coal demand, Nevertheless, the government has falled to facilitate the strategic demand over the price control policies inthe county: As the result, the state-owned electiicity company, PT PLN (Persero) hhas been pressured by the cal price index that has reached USS 100.per MT, hich level is far above the prediction of the coal mining industry. With the coal price index reaching that high, PT PLN would have additional burden (COAL ASIA ERAT 25a 8 2 worth approximately IDR. 16 the form of coal expendinure, given the fact that the Cost of Production (BPP) has been set based othe coal price index of USS 65. However, the coal m actors, specifically the supple PLN, have expressed the that it would be inappropriate ant ‘quite unfair ifthe additional c expenditure of IDR 16 tnllian becomes the burden of just the suppliers of PF PLN, considering that so many coal ‘mining companies do not contribute te the domestic supply Moreover, PT PLN has to be actively involved in providing the celectzicity power to around 3,000 villages in Indonesia, most of which ‘need huge costs or the installation, 2 PT considering thelr existence in the exsiera regions of Indonesia. The procurement also requires electricity transmission for village regions, which projects cannot be handed over to the private sect Besides tha, the high Indonesia Crude Price (IDP}, like it or nox, would affect the government in providing the funds to PY PLN, due tothe high coal price, However, the strategic measures of the government to immediately establish 4 formula to determine the coal peice specifically for domestic supply should ‘be settled, The formula to determine the domesiie coal price should be first discussed between the government, in fits capacity as the manager of domestic energy supply on one hand, an the coal ‘mining business actors on the other hand Policy to Regulate the Price Basically, the problem concerning, the domestic coal price is the problem concerning the long-term vision, Long before the cosl power plants dominate che energy mix in Indonesia, the wemment should have established that = oes ironical make the the ESDM Ministry stat deal with the problems. We have 19 nowledge the fact thatthe problems have worsened because the government has delayed setting the role of coal as the country’s energy, and managed i as «4 mece commodity. 11s just reasonable that coal mining business actors simply refuse to be {orced to sell coal ima price far helow the index of the intermational market price, For the business actor, the policy mechanism ofthe selling price (of export and domestic coal) should follow the Coal Price Reference (HBA), which fs actually apstluct ofthe government that PF PLN atheTt would be just wrong Ifthe mining, business sell their coal (export & domestic) without complying with the policy of ESDM. From the government perspective in stipulating the mech: price thus far, the decision to stipulare a of the selling 1 price for the coal to be supplied 10 PT PLN is the “homework” the ESM -as td, And the work shoulda nto account the interest the inane in relation to the National N Revenue (PNBP), Corporate Tax. ane es in Long before established a formula om coal se price, tt was difficult for the governm to make an adequate pr National Non-Tax Revenue (PNBP Many times in the past, the matte became the topic of heated debates in hearings atthe House of Representatives (DPR), between the government and ‘house members. Moreover, there were also demands of various parties that, as the world’s biggest coal exporter country, Indonesia should play ant Important role in having a part of the control aver the coal price in the liternational market. The policy to determine the coal selling price in compliance with the Coal Price reference (HBA), we have to admit, is one of the achievernents of the Ministry of Energy and Mineral Resources (ESDM). Another i of ESDM is having the paid in advance by the coal coal royal ‘mining business actors before the coal products can be sold to other buyers. Through such advanee payment of ry becomes very clear that the iment firmly applies a philosophy sfer of ownership of the natural sources (coal) from the state to the of increasing PNBP revenue, however hhas made the coal price for the domestic use increase ro the same high level The government seemed to set similar standard on PT PLN that has t struggle in ts role to full hublic Service Obligation (PSO) and various coal importer countries that have different financial capabilities and natural Long before this, the government should have separated the coal price for domestic utilization with that for expo separation of selling prices would make purposes. Making such the government consider, not only the economic value, but also rationality ‘of most people that the government should be responsible in managing the country’s natural resources for the most benefit of the people. Without making such separation, most people have certainly had n sgaive opinion against the government on the mater. In setting our different selling prices for the damestic and export markets, ideally, the government should take [mvo account the interests of various stakeholders inthe industry, including the Ministry of Energy and Mineral Resources (ESDM), the Ministry of Finance, the local governments, and the ‘mining investors, By separating the coal price for domestic utilization with that for expon trade, which measure should have been taken by the government ‘ong time ago, the debates over the $ 100 ‘would have been anticipated with the coal price index reaching ave soluble formula already prepared, ESDM authority should confirm the decision to For the long-term goals, th separate domestic and export coal prices