Jakarta – Despite the many opposition and grudging acquiescence from coal industry groups and international buyers, President Joko Widodo’s policy of banning coal exports must be interpreted as a national effort to prevent a worse global energy crisis. The Executive Office of the President (KSP) defended the policy, calling for mutual cooperation from all stakeholders to prioritize local energy capacity.
“The global energy crisis has pushed countries to compete for reliable energy sources, including thermal coal from Indonesia. Therefore, It is important for us as a nation to jointly contribute in this matter [to prevent domestic energy crisis]. Be it the government, the community, PLN [State-owned utility] and national mining entrepreneurs,” said Deputy Chief of Staff for Infrastructure, Energy and Investment of KSP Febry Calvin Tetelepta, at the Bina Graha Building, Jakarta, Thursday (6/1).
According to Febry, the President’s directive to prioritize the coal supply for domestic needs is in line with the 1945 Constitution’s mandate. It also showcased the government’s consistency in meeting the electricity needs of 270 millions citizens. “This is a genuine gesture from the President to side with the interests of the people,” he said.
Febry also called on mining companies to adhere to the Domestic Market Obligation as stipulated under the Law No. 3/2020 on Mineral and Coal and Government Regulation No. 96/2021 on Business Activities. Mineral and Coal Mining. The DMO policy requires coal mining firms to sell at least 25 percent of their production in the domestic market and to cap the selling price at US$70 per ton for state-owned electricity firm PLN’s coal-fired power plants.
“The government has not blindly banned coal exports. The government appreciates companies that fully comply with DMOs and contractual obligations to PLN. However, the government will not hesitate to revoke business licenses or give any penalty obligations to companies that have yet to comply with sales contracts or their DMO quota,” said Febry.
Febry added, in the medium and long term, the President has ordered the Energy and Mineral Resources Minister and State-Owned Enterprises (SOE) Minister to build a permanent DMO mechanism, ensuring the country to meet national electricity demands and be adaptive to the challenges of the global energy crisis.
Starting on Jan. 1 Indonesia, as the world’s biggest thermal coal exporter, announced that it was banning coal exports for a month. The policy was taken after the country saw supplies at domestic power plants fall at critically low levels, putting Southeast Asia’s biggest economy on the brink of widespread power outages.
