Indonesia’s domestic coal consumption volume is estimated to touch only 100 million tons (MnT) this year, much lower than the government’s coal domestic market obligation (DMO) volume target of 155 MnT.
Executive Director of the Indonesia Coal Mining Association (ICMA) Hendra Sinadia said that the much lower coal consumption was primarily due to lower electricity consumption amid the Covid-19 pandemic and the implementation of large-scale social distancing policy in a number of regions.
Hendra said on Wednesday that the lower electricity consumption has prompted Indonesian state-owned electricity firm PT PLN, the largest coal consumer in the country, to cut down its coal consumption. Coal demand from independent power producers and other domestic industries are also expected to decline. Hendra said that several coal miners have actually prioritized the domestic market amid lockdown policies applied in export destination countries.
According to him, the special coal price for DMO of USD 70 per metric ton (MT) can be applied if the Indonesian coal benchmark price (HBA) is above the DMO price. Currently the HBA is still below the DMO price, so the company also sells their coal to PLN in accordance with the HBA set by the Ministry of Energy and Mineral Resources every month.
Chairman of the Indonesia Mining Experts Association (or Perhapi), Rizal Kasli also said that coal DMO volume this year is expected to be lower than the government’s initial target due to declining electricity consumption. He added that this is also due to delay in the completion of a number of coal-fired power plants, initially scheduled for this year.
Indonesia targets its coal DMO this year to reach 155 MnT. The coal DMO until the first quarter of 2020 consisted of electricity supply (PLN) of 25.6 MnT. Meanwhile, domestic coal demand for the general non-electricity sector reached 5.93 MnT.
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