Indonesian government has issued 49 implementing regulations under Omnibus Law Number 11 of 2020 on Job Creation, one of which is in the energy sector - Photo: Special

JAKARTA (TheInsiderStories) – The energy and mineral resources (EMR) ministry, exempt the obligation for a number of coal producers to pay their compensation after failed to fulfilled their domestic market obligation (DMO), the regulation showed. These waiver gave to the Special Mining Business Permits holders for Coal Production Operations and Coal Mining Business Work Agreement for Production Operation stage.

The new policy stipulated in the Ministerial Decree Number 255.K/30/MEM/2020 concerning the Fulfillment of Domestic Coal Needs in 2021, which was stipulated by the minister, Arifin Tasrif, on Dec. 29, 2020. In the samet year, the special treatment has also been given to them, by delayed the submission of Work Plan and Budget for the coal producers to be submitted after the first quarter of 2020.

This plan is regulated in ministerial regulation Number 7 of 2020 concerning the procedures for granting territories, permits and reporting on mining and mineral mining business activities. The government also changed the coal production quota in 2020 to improve the price of coal in the first semester.

Based on the ministry data, the realization of the DMO in 2020 only 108.45 million tones (MT) of coal or 69.97 percent lower of this year’ target at 155 MT of coal and the realizations in 2019 which reached 138.42 MT of coal. The DMO has decreased by around 21.6 percent in annual basis.

Since last year, the Indonesian Coal Mining Association has proposed a relaxation to the government by temporarily eliminating fines on the DMO policy considering the weak of domestic consumption due to COVID-19 pandemic. Based on the new regulation, the portion of DMO sales at least 25 percent of total production of the coal producers.

The government also set a maximum coal selling price for domestic power plants at $70 per ton. Then, if the producers not meet their obligation, they must pay the compensation.

The EMR ministry sees, the demand for DMO is estimated to increase by 21 percent to 187 MT of coal in 2024 from last year. In 2021, the domestic demand is estimated increases to 168 MT of coal, 2022 to 177 MT of coal, and 184 MT of coal in 2023.

Director at the ministry, Sujatmiko, said the coal production in 2021 could reach 609 MT of coal from last year around 550 MT of coal. Until November 2020, the coal production has reached 514 MT of coal or around 93.45 percent of the target.

Then, he continued, the production could raises to to 618 MT of coal in 2022, 625 MT of coal in 2023, and then in 2024 to reached 628 MT of coal. While, the proven reserves of coal in 2020 are estimated at 39.31 billion tones of coal. But, in 2024 its estimated to decreases by 5.5 percent to 37.15 billion tones of coal.

Sujatmiko stated, this estimating with calculation the economy recover from the pandemic, the coal consumption for electricity generation, fertilizer, cement, textile and paper industries will increases. In addition, some smelters will operating next year and to support the domestic demand for coal.

Written by Editorial Staff, Email: theinsiderstories@gmail.com