JAKARTA: The government and related stakeholders will discuss price of mine mouth coal as part of its efforts to set a reference for miners and electricity plants.PLNs Primary Energy Director Nur Pamudji said the company has been invited by the government to discuss the reference price of mine mouth coal to increase business activities in the sector. Mine mouth coal is the coals found nearest to the mines extraction point, while mine mouth power generator is plant located near the point.There are a number of mine mouth power generating projects that will be tendered soon, said Pamudji, adding the reference price should take account of production costs and reasonable rate of return to make it attractive for investors.Previously, Executive Director of Indonesias Coal Miners Association Supriatna Suhala has said that reference price for mine mouth coal should be lower than domestic coal reference price (HPB) as it does not have transport cost.The association has held numerous meetings with Energy and Mineral Resources Ministry for the past three months, he added. We only want it to be fair.PT Triaryani, one of mine mouth coal miners, said it expected the reference price can soon be issued. The easiest formula for the price is using Indonesian Coal Index and then discount it by 5%-10%, Triaryani Chief Executive Teddy Setiawan said.Lengthy discussions on the reference price created risk for further delays and higher opportunity costs of mine mouth projects, making it less attractive for investors. One case to illustrate the matter is the Banjarsari mine mouth power plant in Tanjung Enim, owned by PT Bukit Asam, which has a capacity of 2x100 MW. Both Bukit Asam and PLN have agreed a price of $3.87 cent a kWh in 2008, but both companies cannot sign sales and purchase agreement as the reference price has not been set. Triaryani, which has coal mines in Rawas Ilir in South Sumatra, is also interested to invest in such power plant and has made a consortium with South Koreas Midland Power to participate in tender of South Sumatra steam power plant VI which has a capacity of 2x300 MW. The project is estimated to cost $800 million. (t03/msw)

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