The Ministry of Energy and Mineral Resources has approved proposals from some coal miners to sell part of their coal production to other miners via so-called coal DMO quota transfer mechanism to help the latter group fulfill their coal domestic market obligation (DMO) quotas.
Sri Rahardjo, Director for Coal Management and Development at the Ministry of Energy and Mineral Resources, said that the ministry only approves requests made by coal miners which have already fulfilled their DMO requirements.
Speaking at the 6th Coal Buyers and Producers Meeting on Wednesday, Sri said that the ministry has also turned down proposals from miners which have failed to meet the ministry’s requirements.
Under the government’s coal DMO policy, coal miners operating in the country are obliged to allocate at least 25 percent of their output for domestic market including power plants.
However, some coal miners are facing difficulties in fulfilling the 25 percent DMO mainly because the specifications of their own coal output do not meet the specifications required by domestic consumers particularly power plants. As such, coal miners are allowed to get the required coal from other miners to meet the DMO policy via the DMO quota transfer mechanism.
The Directorate General of Coal and Mineral at the ministry recently issued a decree on the coal DMO transfer mechanism, which among others stipulates that only miners which have fulfilled their DMO quota that are allowed to be involved in the coal DMO quota transfer. The decree also limits the coal volume that can be sold by the miners via the DMO transfer mechanism. The price of the transaction will be determined based on business-to-business negotiation between the miners.
Sri Rahardjo reiterated that the DMO policy is applied to all coal miners including those holding the coal contracts of work and IUP mining business licenses, and warned that failure to meet the DMO quota will affect the miner’s production plan in the following year.
As reported by petromindo.com earlier, there are two miners namely PT Bukit Asam Tbk and PT Indika Energy Tbk which have already submitted proposal for DMO quota transfer to the Directorate General of Mineral and Coal.