Some buyers of Indonesian coal are holding coal shipments pending revision of a regulation which will require companies to use national ships for shipping the power-station fuel, Hendra Sinadia, executive director of the Indonesian Coal Mining Association, said on April 3, 2018.
Buyers who suspend shipments are those negotiating new supply contracts while deliveries for existing contracts aren’t affected, Sinadia said.
Under a regulation issued by Indonesia’s Trade Ministry last year, coal and crude palm oil must be shipped overseas using national shipping companies, unless the local firms are unable to provide the vessels. The new regulation is scheduled to be in effect in this month.
Local media recently reported that the Trade Ministry had decided to postpone implementing the regulation but so far, the ministry is yet to issue formal revision to the regulation.
“People will have to nominate vessels at least within two months for new contracts. “If they nominate foreign vessels, there is a concern that they will be accused of not complying with the rule,” said Sinadia. “The situation is unsettling.”
Sinadia didn’t have data on how many shipments are on hold.
The industry expects the government will issue the revised rule soon as the deadline to use national vessels is approaching.
“It would be great if the rule is revoked. But even if it’s just a revision, as long as there is clarity that won’t hurt exports, we can accept it,” Sinadia said, adding that considering the lack of data, it will be fair to wait 1 year or 2 years before applying the regulation.
Based on preliminary data compiled by ICMA from various sources, domestic carriers operate 139 vessels which can ship 4.6 MnT coal monthly. It’s a fraction of Indonesia’s monthly coal exports of between 30-35 MnT.
Most of the national shipping carriers operate only barges which are used for delivering coal for domestic buyers and within the Southeast Asia region, Sinadia said.
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