Realized coal domestic market obligation (DMO) for the Indonesian power utility sector as of February end was 16.16 million tons (MnT), Director of Coal Development and Management at the Indonesian Ministry of Energy and Mineral Resources, Mr. Sujatmiko stated. He said that the realized coal DMO for other industries is still being calculated by the ministry.
Jatmiko said that the government of Indonesia is confident that the coal DMO target this year of 155 MnT will be realized.
Under the government’s coal domestic market obligation, coal miners are required to allocate at least 25 percent of their coal output for the domestic market including the power plant sector.
Indonesia’s monopoly coal-dependent state-owned power company, Perusahaan Listrik Negara (PLN) is estimated to require about 109 MnT this year.
He believes that coal miners can meet the needs of the DMO despite the depressed economic conditions. The selling price of coal for general electricity is USD 70 per ton this year. The selling price of coal for other industries in the country refers to the thermal coal benchmark price (HBA) set by the government every month.
“It is projected that by the end of the first quarter it is estimated to be in the range of USD 65 per ton to USD 67 per ton. With the HBA position below USD 70 per ton, mining companies prioritize coal sales in the country so that the DMO target will be achieved”, he said.
He said that if the company could not meet the provisions of the DMO, it would be subject to sanctions or compensation payment obligations for a number of domestic coal sales shortages. The amount of compensation is the lack of volume of obligation to fulfill DMO multiplied by the tariff based on the quality of exported coal.
“The rate is USD 0.5 per ton for calories less than 4,200 Kcal/kg GAR, the rate is USD 1 per ton for 4,200 calories to 5,000 Kcal/kg GAR, the rate is USD 1.5 ton for more than 5,000 Kcal/kg GAR”, Sujatmiko said. In addition to the imposition of financial penalties, there are also additional sanctions in the form of reducing coal production the following year in accordance with the amount of the shortfall.
The government has set the country’s coal production target this year at 550 million tons, lower than realized output last year of 610 million tons.
Director General of Mineral and Coal at the Ministry of Energy and Mineral Resources Bambang Gatot Ariyono said March 12 that the country’s coal production has yet to be affected by the current Coronavirus outbreak. He said that coal output as per 6 March 2020 reached 94.72 MnT, or 17.22 percent of the full-year target of 550 MnT. Of the first two-month realized coal production, about 16.73 MnT were absorbed by the domestic market, while 30.24 MnT exported.
Bambang said that of the full-year production target of 550 MnT, about 395 MnT are expected to be exported, and 155 million to be allocated for the domestic market.
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