Indonesia: East Kalimantan Raises Concern over Reduction in Coal Output

Indonesia-The cutting of coal production quotas to provincial Mining Business Permit (IUP) holders have led to protests from regional heads whose economies are dominated by coal. One of them came from East Kalimantan.

Indonesian Ministry of Energy and Mineral Resources has cut half the coal production targets of regional IUPs as a consequence of not fulfilling the mandatory domestic supply or Domestic Market Obligation (DMO) in 2018.

Consequently, the decline occurred in 10 provinces, which include Jambi, South Sumatra, Bengkulu, East Kalimantan, South Kalimantan (South Kalimantan), Aceh, Riau, North Kalimantan, Central Kalimantan, and Sumatra West.

Of these, East Kalimantan and South Kalimantan are regarded as the provinces with the largest coal production.

In fact, East Kalimantan was provided with the highest planned coal production for IUPs in CY18, recorded at 103.47 MnT. However, the region only managed coal output of 69.64 MnT during the year.

Besides, the realisation of the East Kalimantan coal DMO last year was 8.32 MnT, which was well short of the 25% DMO supply obligation as required by the government.

As a result, the quota of coal production provided to IUP in East Kalimantan was only 33.28 MnT in CY19, slumped more than half compared to last year’s production realisation.

Seeking help, East Kalimantan Governor, Isran Noor, had directly raised the issue to the President Joko Widodo so that the production restriction could be lifted.

He cited that coal commodities were very dominant in supporting East Kalimantan’s economy. So that when production is cut dramatically, it will have a negative impact on social-economic conditions in East Kalimantan.

DMO Quota for CY19:

Earlier in Jan’19, Indonesian Ministry of Mineral and Coal has set the quota for DMO at around 20-25% for CY19.

The use of domestic coal under DMO is intended to guarantee the supply of primary energy sources and raw materials in Indonesia, with its volume increasing every year.

In 2015 the DMO was 86 MnT, in 2016 it was 91 MnT, in 2017 there were 97 MnT and in 2018 as many as 115 MnT.