The Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan. (Antara Photo/Widodo S. Jusuf)

Indonesia Allows Some Coal Companies to Resume Export on Wednesday

BY :RANGGA PRAKOSO

JANUARY 11, 2022

Jakarta. The government has decided to allow some coal miners, which have fulfilled their coal sales quota to the domestic market, to resume export on Wednesday after the country's coal stockpile for power generation had risen above a critical level, a senior minister said on Monday. 

"There are a dozen ships that are being filled up with coal tonight. They will be on their way. Then we are going to allow [other] exports in stages. We'll see on Wednesday," the Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan said. 

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Luhut did not identify the companies allowed to resume the exports. He said the gradual export opening would depend on the stockpile condition PLN and individual mining companies' fulfillment of their domestic market obligation (DMO).

Still, the move could offer leeway for some of Indonesia's largest coal miners like Adaro Energy, state-controlled Perusahaan Tambang Bukit Asam, and Indika Energy, which have been hit by a  blanket export ban the government put in place on Jan 1.

Initially, the government decided to ban coal exports for an entire month in January after state utility company Perusahaan Listrik Negara (PLN) reported that their stockpile dropped to a dangerous level, putting the country at risk of widespread blackout. 

Luhut said PLN's coal stockpile had now improved, approaching a minimum supply level for at least 20 days of its power plants operation. "[The stockpile] is all good. It has reached a 15-day stock. Now it's gradually going to 25-day," Luhut said. 

Under the DMO policy, Indonesia requires coal miners to supply 25 percent of their annual production to the domestic market at a maximum price of $70 per metric ton or pay a fine for failing to do so. PLN is the largest coal consumer in Indonesia, using about 80 percent of the domestic coal supply in 2020. 

The global coal price has risen to more than twice the DMO price last year, leading some companies to opt for selling their coal exclusively overseas. 

Data from the Ministry of Energy and Mineral Resources (ESDM) showed coal delivered by the miners to the domestic market plunged 52 percent to just 63 million metric tons last year from 132 metric tons a year earlier. 

Luhut said the government would implement several reforms to the PLN contracts with domestic coal miners to prevent a similar situation. These include encouraging miners to enter a long-term contract with PLN on a cost, insurance, and freight (CIF) basis.

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