Indonesian Energy and Mineral Resources Ministry (ESDM) has set the coal production target sold domestically under the Domestic Market Obligation (DMO) at 155 MnT next year, 21% higher than this year’s target of 128 MnT, Kontan newspaper reported citing Dodik Ariyanto, director at the Mineral and Coal directorate.
Mr Dodik said the ministry has collected the numbers from domestic coal producers.
The newspaper reported that state electricity company Perusahaan Listrik Negara (PLN) would take 109 MnT of coal sold domestically, the manufacturing industry would absorb 16.52 MnT, and 14.54 MnT would be taken by cement industry.
It was also highlighted that the government has agreed to a proposal submited by PLN which would imply DMO coal price capped at USD 70/MT for the next year.
The Indonesian government had introduced the domestic market obligation (DMO) last year to ensure that domestic requirements for the nation’s electricity supply are met before the country’s coal cargoes are diverted to the seaborne export market because of higher price realization.
The DMO policy mandates local coal mining companies to allocate at least 25% of their annual production for domestic buyers — with much of this coal delivered to coal-fired power plants, mainly operated by PLN.
For CY19, Indonesia has set its coal production target at 530 MnT, of which around 402 MnT coal would be sold to overseas market and the remaining 128 MnT would be sold to domestic market under DMO.
Last year, total coal production was 557 MnT, with 442 MnT was sold to export markets and the 115 MnT was sold in domestic market.
Earlier this month, the Indonesian government set the coal benchmark price (HBA) for Dec’19 at USD 66.30/MT. The current price was higher by 0.04% on month-to-month basis as compared to 65.27/MT noted in Nov’19, but was marked 28.3% lower on the year from USD 92.51/MT in the month of Dec’18.
In fact, the Indonesian thermal coal benchmark price has mostly declined every month since Sep’18.
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