The government plans to keep electricity tariffs unchanged this year and next, and the cap on thermal coal for power is intended to shield state-owned utility Perusahaan Listrik Negara (PLN) from price fluctuations.
"We've fixed prices for every transaction at $70 per tonne or HBA, whichever is lower," Energy Minister Ignasius Jonan said on the sidelines of an industry event in Kalimantan on Thursday, as quoted in Bisnis Indonesia newspaper.
Jonan was referring to the monthly Indonesian Coal Benchmark Price (HBA), which was set last week at $101.86 per tonne for the month of March, its highest since May 2012.
The new rule will be applied retroactively to Jan. 1, 2018, and will be reviewed in December 2019.
The rule also allows coal miners supplying PLN to apply for an increase to their approved production quota for the year of up to 10 percent, Jonan said.
The government has been working on plans to regulate domestic coal prices since late 2017, under pressure from PLN, and the discussions have knocked back some coal miners' share prices.
PLN expects its coal demand to climb 18 percent this year to 90 million tonnes.
The government has said national coal output could reach 485 million tonnes in 2018, up from a realised output of 461 million tonnes in 2017. About a quarter of this - 118 million tonnes - is to be for domestic coal consumption, with the rest to be exported.
(Reporting by Wilda Asmarini; Writing by Fergus Jensen; Editing by Tom Hogue)
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