The Indonesian Ministry of Energy and Mineral Resources has reduced this year’s domestic market obligation (DMO) target for coal producers in response to lower consumption by the country’s power houses due to the ongoing Covid-19 pandemic.
The revised coal DMO volume projection for this year is set at 140.8 million tonnes (mn t), down from the initial target of 155 mn t. Last year, realised DMO volume was 138.41 mn t.
Muhammad Wafid, director of mineral and coal development program at the ministry stated that coal demand for power generation is expected to drop drastically.
“Before Covid-19, the coal DMO target for power generation was 108.9 mn t, but now the coal DMO demand projection for the power sector is revised to 87.5 mn t”, he said.
As per the government’s coal DMO policy, coal miners operating in the country are obliged to allocate at least 25 percent of their annual output for domestic market. The government has targeted the country’s coal production to reach 550 mn t this year.
The power plant sector is the single largest coal consumer in Indonesia. There are other industries that consume coal such as smelter, cement clinker, and pulp and paper industries. “There is increasing demand from processing and refining industry”, Wafid added.
Executive director of the Indonesia Coal Mining Association (ICMA) Hendra Sinadia previously estimated that domestic coal consumption would only reach 100 mn t this year, much lower than the government’s target of 155 mn t in line with declining power consumption.
By Aditya Sinha
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