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Indonesia Eases Coal Ban as Production Outpaces Power Needs

Indonesian Chamber of Commerce and Industry said the country would not experience an energy crisis despite the return to coal exports


Coal export
Coal barges queue to be pulled along the Mahakam river in Samarinda, East Kalimantan province. Photo: Reuters

 

Indonesia, the world’s biggest thermal coal exporter, has allowed 37 loaded coal vessels to depart after they secured approvals from authorities, the Coordinating Ministry of Maritime and Investment Affairs said on Thursday.

In a statement, the ministry said an export ban implemented on January 1 had been eased for miners that had met a requirement to sell a portion of their output for local power generation.

Luhut Binsar Pandjaitan, Indonesia’s co-ordinating minister for maritime affairs and investment, said coal export permits would be given only to producers who have fulfilled their domestic market obligation (DMO).

The DMO obligations are set at 25% of total production with a benchmark price of $70 per tonne, the state-run Antara news agency said.

 

Energy Crisis in Indonesia Unlikely

The Indonesian Chamber of Commerce and Industry (Kadin) said Indonesia would not experience an energy crisis despite the reopened coal exports.

“Insyallah, we believe that the energy crisis will not occur,” Kadin chairman Arsjad Rasjid said, adding that national coal production was outstripping domestic needs, including supplies to thermal power plants.

Perusahaan Listrik Negara (PLN), the state utility, said it had procured enough coal at power stations to ensure 15 days of operations.

“I request that this is supervised closely so this also becomes a moment for us to improve domestic governance,” Luhut said.

Indonesia’s export ban sent shockwaves through global energy markets. It was imposed after PLN reported critically low coal stocks at power plants that left the archipelago on the brink of widespread power outages.

Authorities blamed the coal supply crisis on miners failing to meet DMO requirements.

The government has been lobbied by coal miners and its biggest buyers – including Japan and South Korea – to ease the export ban.

There were about 120 vessels either loading or waiting to load off Indonesian’s coal ports in Kalimantan on the island of Borneo on Wednesday, according to Refinitiv Eikon data.

 

  • George Russell with AFP and Reuters

 

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

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