Government sets higher 2019 coal DMO volume target

The Ministry of Energy and Mineral Resources has set coal domestic market obligation (DMO) volume for this year at 128 million tons, higher than last year’s realized DMO volume of 115.09 million tons.

News portal quoted ministry Spokesman Agung Pribadi as saying Wednesday that the higher 2019 coal DMO volume was in line with higher demand from the power plant and manufacturing sectors.

Indeed, state-owned electricity firm PT PLN’s Strategic Procurement Director Supangkat Iwan Santoso has previously said that PLN’s coal consumption this year will increase to around 96 million tons from realized consumption of 91.1 million tons last year. He said that three new coal-fired power plants will start operation this year (September-October), namely PLTU Jawa 7 and 8, each with capacity of 1,000 MW, and PLTU Lontar with capacity of 350 MW.

The 128 million tons coal DMO volume, represents 26.12 percent of the country’s coal production target this year of 489.12 million tons based on the 2019 work and budget plan (or RKAB) of coal miners.

As such, coal miners operating in the country are required to allocate at least 26 percent of their coal output for the domestic market. Of the total 489.12 million tons, around 361 million tons are allowed for export.

The news portal quoted officials from the country’s major coal miners including PT Adaro Energy Tbk, PT Bumi Resources Tbk, and PT Kideco Jaya Agung as saying that the coal firms are ready to fulfill their respective coal DMO quota this year.

But Executive Director of the Indonesia Coal Mining Association (ICMA) Hendra Sinadia said that the government should have not set an overly aggressive DMO target this year on concern that it may not be entirely absorbed by domestic industries as happened last year.

Out of last year’s coal DMO volume target of 121 million tons, only 115.09 million tons were absorbed by domestic industries, leaving coal miners scrambling to find export markets for the unabsorbed coal at home. The country’s realized coal output last year was 528 million tons, higher than the 485 million tons target based on the 2018 RKAB.

Meanwhile, Director General of Mineral and Coal at the ministry Bambang Gatot Ariyono said that of the 128 million tons coal DMO target this year, around 96 million tons will be allocated for power plants, 5.4 million tons for metallurgy industry, 1.49 million tons for fertilizer industry, 16.15 million tons for cement industry, 3 million tons for the textile industry, 6.2 million tons for paper industry, and 14,500 tons for the briquette industry. (*)

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