Entrepreneurs Ask for Coal Quota DMO to be Reviewed

JAKARTA, APBI-ICMA: REPUBLIKA.CO.ID February 11, 2019 reported that the obligation of coal producers to supply domestic market needs has not been determined yet. The employer also assessed the 25 percent quota that had been determined to be well reviewed, because, in 2018, domestic absorption was only 21 percent.

The Executive Director of the Indonesian Coal Mining Association (APBI), Hendra Sinadia, explained that the realization of coal absorption by the domestic sector in 2018 was only around 21 percent. Even though the government has set all businessmen to allocate 25 percent of their production to domestic supply.

"In general, the realization of the DMO in 2018 was around 21 percent or below the 25 percent target. Therefore the government needs to reconsider the target limit of 25 percent," Hendra said when contacted by Republika on Sunday (10/2).

Hendra also estimates that the growth of coal demand for domestic industries and PLN this year will indeed increase. It's just that, said Hendra, the increase was indeed not significant. So, according to him, there needs to be a further study of this quota.

In addition to this 25 percent obligation, Hendra also said that the trend of coal prices this year still has not shown an attractive price. Because, demand from China has not experienced growth until now."It can't be good as the price is due to the weakening of China's economic growth and also the Chinese policy that reduces the use of low-calorie coal," Hendra said.

The issue of quota was also recognized by the Director General of Mineral and Coal, Ministry of Energy and Mineral Resources, Bambang Gatot Ariyono. Bambang explained the government would still discuss the quota issue next week.

Determination of what percentage of the 2019 DMO quota will still be discussed further. "The range is 20-25 percent of production. Tomorrow (next week) will be discussed," Bambang said when contacted by Republika on Sunday (10/2).

PLN has yet to calculate significantly how much total coal needs. It's just that, the Director of PLN's Strategic Procurement, Supangkat Iwan, explained that this year PLN began operating three newly completed power plants.

The addition of three PLTUs is expected to increase PLN's coal needs this year. "If you see that there is an additional PLTU, it will likely increase by around 5 percent," Iwan said last weekend.

It targets the three large power plants to be operational around September-October 2019. "The increase in coal demand is calculated based on generating capacity. Every 1,000 MW requires supply of around 3.5-4 million tons of coal a year, "he said.

Iwan detailed this year that PLN is expected to need 96 million tons of coal. This figure is greater than 2018 which reached 91.1 million tons yesterday. Seeing this need, said Iwan, the DMO policy still needs to be implemented.




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