ANNOUNCEMENT 09 Mar 2018
On 9 March 2018, the Indonesian Energy Ministry issued Decree 23/2018 capping coal prices for power stations.
NUMBER OF INTERVENTIONS
Ministry of Energy Decree 23/2018 (in Bahasa Indonesia)
The Energy Ministry decree 23/2018 requires coal miners to sell at least 25% of their production to power stations at a capped price of 70 USD per metric ton. According to media reports (cf. secondary sources), the move is intended to shield the state-owned utility provider PLN from coal price fluctuations. PLN's strategic procurement director was cited telling reporters that the price cap could save the PLN company 1.31 billion USD in 2018 alone, assuming coal prices remain above 100 USD per MT.
The decree came into force on 9 March 2018 but shall apply retroactively starting from 1 January 2018. It will be reviewed at the end of 2019.
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.