Perusahaan Listrik Negara (PLN), the Indonesian government-owned power utility corporation, has asked the Ministry of Energy and Mineral Resources (ESDM) to maintain the benchmark selling price of coal that is sold domestically under the Domestic Market Obligation (DMO), in the face of industrial proposals on raising the coal price.
Newly-appointed Acting Director of PLN, Sripeni Inten Cahyani, stated that her office has submitted a proposal to the ministry to keep the DMO coal price capped at USD 70 per metric ton (MT).
Director General of Mineral and Coal of ESDM, Bambang Gatot Ariyono, made no comment regarding acceptance of the proposal made by PLN to keep the coal price cap unaltered.
Executive Director of Indonesian Coal Mining Association (APBI), Hendra Sinadia, however stated that a revision of the coal price is necessary in order to reflect the continuously falling trend of coal prices in the global markets. He added by saying that the current price of USD 70/MT will be no longer feasible for Indonesian coal producers.
The Indonesian government applied the domestic market obligation (DMO), introduced just before the elections last year in March, to ensure that domestic requirements for the nation’s electricity supply are met before the country’s coal cargoes are diverted to the seaborne export market because of higher price realization.
The DMO policy mandates local coal mining companies to allocate at least 25% of their annual production for domestic buyers — with much of this coal delivered to coal-fired power plants, mainly operated by PLN.
Earlier this month, the Indonesian government set the coal benchmark price (HBA) for August at USD 72.67/MT, marking its first rise in almost a year.
Notably, this current month’s coal reference price is marginally higher than the coal price cap of USD 70/MT for PLN.
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