Saturday, 05 Dec 2009
Reuters reported that Indonesia is considering giving producers some flexibility to sell coal below the government's monthly benchmark price to cope with competition in export markets.
The government has previously said that it would set up its own monthly coal price benchmark in order to reduce the practice of transfer pricing and reduce losses to the state. Under transfer pricing, some Indonesian coal firms sell coal to affiliates in countries such as Singapore at artificially low prices in order to avoid paying hefty taxes.
Mr Bambang Gatot Ariyono director of mineral and coal production at the energy ministry said that producers were concerned that they might not win overseas tenders if they always have to sell above the benchmark price.
Mr Arivono said that "There are concerns from producers that competitors may bid slightly lower than our benchmark prices to win overseas tenders because they know we can't sell below the benchmark."
He said that "So we discussed a proposal to give flexibility to producers to sell coal below a benchmark price to anticipate competition in export markets. But implementation of the government's coal index is still awaiting completion of regulations under a new mining and coal law passed in December, which are facing delays.”
(Sourced from Reuters)
Reuters reported that Indonesia is considering giving producers some flexibility to sell coal below the government's monthly benchmark price to cope with competition in export markets.
The government has previously said that it would set up its own monthly coal price benchmark in order to reduce the practice of transfer pricing and reduce losses to the state. Under transfer pricing, some Indonesian coal firms sell coal to affiliates in countries such as Singapore at artificially low prices in order to avoid paying hefty taxes.
Mr Bambang Gatot Ariyono director of mineral and coal production at the energy ministry said that producers were concerned that they might not win overseas tenders if they always have to sell above the benchmark price.
Mr Arivono said that "There are concerns from producers that competitors may bid slightly lower than our benchmark prices to win overseas tenders because they know we can't sell below the benchmark."
He said that "So we discussed a proposal to give flexibility to producers to sell coal below a benchmark price to anticipate competition in export markets. But implementation of the government's coal index is still awaiting completion of regulations under a new mining and coal law passed in December, which are facing delays.”
(Sourced from Reuters)
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