Coal buyers spooked by Indonesia's new shipping rules -Assoc | Energy & Oil

JAKARTA, Feb 8 (Reuters) - Buyers of Indonesian coal are holding back orders of the fuel after the government issued new shipping rules for coal and crude palm oil that would restrict exports to Indonesian vessels, an industry association said on Thursday.

Jakarta issued rules in October requiring coal and palm oil exporters to use Indonesian-flagged vessels and Indonesian insurance companies, to boost the role of the archipelago’s shipping industry in its export market.

However, guidelines on implementing the rules and possible exemptions have not been released, raising concerns among shippers in Indonesia, the world’s top thermal coal exporter and palm oil producer.

The regulation will take effect at the end of April.

“There was some information, several potential buyers from abroad put on hold making any new contracts,” Hendra Sinadia, executive director of the Indonesia Coal Mining Association (ICMA), told reporters.

Describing the new rules as “dangerous”, Sinadia said they could affect export volumes and state revenues if shipping contracts had to be renegotiated to shift to so-called cost, insurance and freight (CIF) contracts from free-on-board (FOB) contracts.

Under CIF contracts, the seller is responsible for the shipping arrangements and must buy insurance to protect the cargo against losses during the voyage. Under FOB contracts, the buyer procures the vessel and is responsible for all shipping costs.

The industry is worried that time is running out to make adjust....

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