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Indonesia could change coal pricing policy

The Indonesian government could reverse a key plank of its coal policy that was put in place to deal with transfer pricing abuses.

Reuters quoted an official today saying that the energy ministry is discussing with coal producers the possibility of giving them some flexibility to sell coal below the government's monthly benchmark price to help them deal with competition in export markets.

The government had intended to set its own monthly coal price benchmark to stop the treasury from losing revenue through transfer pricing.

The report said that some Indonesian coal firms sell coal to related parties abroad at artificially low prices to avoid paying large amounts of tax.

The official said that even if producers sell below the government's benchmark price, they would have still have to pay taxes including royalties based on the benchmark price.

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