Coal stockpiles running at critical levels in Indonesia

• Low coal inventories and RKAB delays signal supply tightness, supporting prices
• IPPs face rising fuel supply risk, threatening power generation stability

Mysteel Global: Coal-fired power plants in Indonesia are facing a growing risk of fuel shortages, with inventories at most facilities sufficient for less than a fortnight’s operation, local media Kontan and Bisnis Indonesia quote industry officials as warning on February 24.

Joseph Pangalila, a supervisory board member of the Indonesian Private Power Producers Association (APLSI), said that coal inventories at most coal-fired power plants nationwide currently cover only around 10 days of consumption. He made the remarks during an industry event hosted by the Indonesian Coal Mining Association in Jakarta on Tuesday.

Under standard operating requirements, coal-fired power plants are expected to maintain inventories sufficient for at least 25 days of operation without additional supply.

“The situation is already very critical. Most power plants now have coal stocks below 10 days. Only a few have more than 10 days of supply. Across the Java-Bali system, only two plants still maintain inventories reaching 25 days,” Kontan quoted Pangalila as saying.

He noted that current coal inventories are still being supported by allocations under last year’s Work Plan and Budget (RKAB). Should approval of the 2026 RKAB be delayed until late March, some coal suppliers may suspend deliveries to independent power producers (IPPs).

RKAB is Indonesia’s government-approved annual mining work plan that determines the production, domestic sales, and export volumes permitted for coal producers, Mysteel Global learns.

Indonesia plans to reduce national coal output to around 600 million tonnes this year from the 790 million tonnes produced in 2025, aiming to support global coal prices, as Mysteel Global has reported. However, finalizing the new RKAB quotas has yet to be completed, although several large miners may be exempted from production cuts on the condition that they need to raise domestic supply allocation from the typical 25% to around 30% of their output in the first half of 2026.

In Indonesia’s power sector structure, state utility Perusahaan Listrik Negara (PLN) generates power through subsidiaries while maintaining a monopoly over electricity transmission and distribution. IPPs generate electricity and sell it to PLN, with PLN-operated plants and IPPs each accounting for roughly half of the country’s total power output.

Pangalila said supply tightness had already emerged in late 2025 and intensified in early 2026 due to delays in RKAB approvals.

“Even before any RKAB reductions, coal availability is already at a critical level. So what will happen going forward?” he questioned.

To maintain supply continuity during the approval delay, the government has temporarily allowed miners to continue production under previously approved RKAB quotas until the end of March, as reported. However, anticipated reductions in new quotas could force many producers to scale back or suspend output later in the year.

“If the government only finalizes the new RKAB at the end of this quarter, some suppliers may immediately halt production because they would have already exceeded their production quotas,” he added.

APLSI chairman Eka Satria also warned that tighter RKAB restrictions could disrupt coal procurement by IPPs due to limited supplier participation, Kontan reported.

Market participants noted similarities with the situation in January 2022, when Indonesia imposed a month-long coal export ban after domestic power plant inventories fell to critically low levels, threatening national blackouts should the situation have continued. The supply shortage occurred due to widespread non-compliance by miners with Domestic Market Obligation supply requirements to local utilities, particularly PLN.

The export suspension triggered a sharp rise in Indonesian coal prices. Mysteel assessments showed Indonesian 3,800 kcal/kg NAR coal climbed to $75/t FOB Kalimantan on February 7, 2022, from $66/t on December 31, 2021.

Since Indonesia announced planned RKAB production cuts in early February this year, coal prices have again risen rapidly. On February 24, Mysteel assessed Indonesian 3,800 kcal/kg NAR coal at $58/t FOB Kalimantan, compared with $50.3/t on January 30.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.