The Ministry of Energy and Mineral Resources (ESDM) has announced changes to the reference coal price (HBA) formula, which was previously based on the average of four international coal price indices. Now, the HBA will be obtained from the average selling price of coal in the previous two months with a different percentage.
The old HBA formula was obtained from the average indexes of the Indonesia Coal Index (ICI), Newcastle Export Index (NEX), Globalcoal Newcastle Index (GCNC), and Platt’s 5900 in the previous month, with equivalent quality at 6,322 kcal/kg GAR calories. 8 percent Total Moisture, 0.8 percent Total Sulfur, and 15 percent Ash. This price will be directly used in selling and buying coal commodities (spot) for one month at the point of delivery of sales on a Free on Board basis on the carrier ship (FOB Veseel).
According to the Special Staff of the Minister of Energy and Mineral Resources for the Acceleration of Minerba Governance, Irwandy Arif, the change to the HBA Reference Coal Price formula is based on the Minister of Energy and Mineral Resources Decree (Kepmen) No 41 of 2023. Irwandy explained that the new HBA formula uses the average selling price of coal the previous two months with different percentages, namely 70 percent in the previous month, and 30 percent the previous two months.
Responding to this change, the Executive Director of the Indonesian Coal Mining Association (APBI), Hendra Sinadia, highlighted the unfairness of the current HBA formula which is much higher than the actual selling price of coal. Businessmen have long complained about the imbalance between the indices representing Australian coal prices, NEX and GCNC, which are too high compared to Indonesian coal price indices, namely ICI and Platt’s.
Hendra explained that most coal buyers from Indonesia refer to the ICI index. Thus, there is a disparity or a very large gap between the income and the obligation to pay coal entrepreneurs’ royalties. Therefore, before the institution that determines compensation rates is formed, the HBA formula should be revised first.
In his statement, Irwandy emphasized that the change in the HBA formula aims to provide a balance between the selling price and a fair HBA for the government and companies. All prices are taken in real terms from e-PNBP, and the percentage is taken from e-PNBP to see what percentage occurs.
It is hoped that with this change in the HBA formula, a better balance will be created for all parties.