Indonesian Government Bans Coal Exports for a Month to Prevent Power Outages for 10 Million Customers

JAKARTADAILY.ID --- Around 10 million domestic electricity customers are suddenly reported to be in an emergency condition because they are threatened with no electricity.  The reason is because the supply of coal for power plants managed by the only SOE that operates electricity network in Indonesia, PT Perusahaan Listrik Negara (Persero) or PLN will be constrained.  The choice is none other than holding back the coal supply in the country in order to secure national energy security.

On this basis, the Government of Indonesia confirms to prohibit coal exports abroad between January 1, 2022 to January 31, 2022. This prohibition applies to all holders of Mining Business Permits (IUP) or IUPK stages of Production Operation activities, IUPK as Continuation of Contract/Agreement Operations and PKP2B.

This step will ensure the fulfillment of coal supply for power plants and safe supply of power to more than 10 million PLN customers, ranging from the general public customers to industries, in Java, Madura, Bali (Jamali) and non-Jamali areas.

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Why are all exports prohibited? They are forced, and this is temporary. If the export ban is not implemented, nearly 20 Steam Power Plants (PLTU) with a power of around 10,850 megawatts (MW) will be extinguished. "This has the potential to disrupt the stability of the national economy.  The generator has been fulfilled, it will return to normal, it can be exported. We will evaluate it after January 5, 2022," said the Director General of Mineral and Coal of the Ministry of Energy and Mineral Resources (ESDM) Ridwan Jamaludin, at the Socialization of Coal Fulfillment Policy with coal entrepreneurs  in Jakarta, last weekend quoted on Sunday (2 January 2022).

Domestic Market Obligation

The government, continued Ridwan, has reminded coal entrepreneurs several times to continue to fulfill their commitment to supply coal to PLN.  However, the realization of coal supply every month to PLN is below the mandatory percentage of coal sales for domestic needs (Domestic Market Obligation/DMO).  So that it accumulates and at the end of the year PLN's power plants experience a coal supply deficit.  According to him, a safe supply of coal at the PLTU PLN is more than 20 days of operation.

"From the 5.1 million metric tons (MT) assigned by the Government, up to January 1, 2022, only 35 thousand MT or less than 1% has been fulfilled. This amount cannot meet the needs of each existing PLTU. If steps are not taken immediately  strategically, there will be widespread blackouts," said Ridwan.

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The government has issued the Decree of the Minister of Energy and Mineral Resources Number 139.K/HK.02/MEM.B/2021 which regulates more specifically the obligation to fulfill coal for domestic needs, namely a minimum of 25% of the approved production plan and the selling price of coal for electricity supply.  for public use at US$70 per metric ton.

For this reason, Ridwan emphasized to holders of IUP or Special Mining Permits for the Production Operation stage to comply with the fulfillment of domestic coal needs.

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At the event, it was revealed that in essence coal entrepreneurs understand and support the policy of temporarily banning coal exports in order to fulfill PLN's coal needs to avoid unwanted power outages.  However, coal entrepreneurs also requested that PLN also improve its coal procurement mechanism so that it gets better.

 "At the same time, we also ask that PLN make efforts and steps for efficiency and business activities that support the provision of quality and reliable electricity for all levels of Indonesian society," he concluded. (*)