Indonesian Energy and Mineral Resources (EMR) ministry officially set coal sales for domestic market obligation (DMO) to be at least 25 percent of the planned total coal production in 2020.
The policy is in line with the determination of the 2020 selling price of coal at USD 70 per metric ton (MT) for the supply of electricity for public use.
“The commitment of the government to continue the policy is based on consideration of domestic needs and business sustainability,” said the head of communication and public information at the ministry, Agung Pribadi, in a written statement on Tuesday, January 7.
Furthermore, Agung stated that the government had prepared strict sanctions on business permit holders who were absent from the obligation. The sanctions provided were different from last year. “If the previous regulation only cuts production quota in the following year, this is an obligation to pay compensation for a number of sales shortfalls,” he said.
The amount of compensation is calculated based on the Free-on-Board point of sale price on the ship and becomes the highest price limit if the coal benchmark price (HBA) exceeds that price. The government determines coal sales based on the reference specifications on calories 6,322 kcal per kilogram of GAR, 8 percent total moisture, and 0.8 percent total sulfur, and ash 15 percent.
The requirements that must be met for electricity supply business entities in the public interest must fulfill the contract agreed with the IUP holder and make plans to meet the coal needs for the following year by prioritizing the long-term contract mechanism. The policy took effect on January 1, 2020 and was established through Energy Minister Arifin Tasrif through Ministerial Decree Number 261 K/30/MEM/2019 concerning Fulfilling Domestic Coal Needs for 2020.
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