Coal Contract Price Adjusted Market Mechanism

The Government will evaluate all coal sales contracts there. All contracts are still using fixed price (fixed / flat) will be revamped with fluctuating prices.

This was conveyed by the Director General Simon Sembiring Minerbapabum interrupted a hearing with House Commission VII on the MPR / DPR, Jakarta, Thursday (19/6/2008).

"Sales contracts that we now evaluate gimana. It's not that the sales contract must fix the rate. For example, 5-year agreement contrived, OK U.S. $ 30 dollars per ton to 5 years. I can not then," he said.

Simon emphasized that the government wanted the price stated in the coal sales contract is a fluctuation formula. So that the sales price of coal could follow market prices.

"So if you take U.S. $ 1 at the market price then what percentage of the price rises. And so if you come down to U.S. $ 1, what percentage of the decline," he said.

With such a formula, according to Simon, will benefit both parties, both sellers and buyers. So when prices rise, sellers would benefit. And when prices fall, buyers will also benefit.

"That way you can to protect the seller and buyer. Hence, there should be a clause that," he said.

So far, there are some contracts that are still using fixed price. If anyone intends to use the escalation clause to include only 'can be reviewed every year'.

Simon emphasized, using a fixed price is justified by a business for both parties agree. But on the other hand, if the price remained low in the contract when market prices are high, the state also lost potential profits.

Because the government owns 13.5% of the sale of coal. So if coal is sold at below market prices, the government is also a loss. Not to mention the potential loss of tax because the seller to get a low price.

"The business is okay, but it's ours 13.5%. And then if he is less income, the income tax he was also less," said Simon.

But Simon did not specify when the obligation fluctuating prices will apply.