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Indonesia May Allow Coal Exports on Monday or Tuesday

Minister says decision is imminent. His comments follow appeals by the Philippines, and governments in Japan and South Korea, for Jakarta to drop its export ban


Indonesia
Indonesia, the world's biggest thermal coal exporter, suspended exports on January 1 after its state power utility reported dangerously low inventory levels of the fuel at domestic power stations. Photo: Adaro Energy.

 

Indonesia may allow coal exports to resume by the end of Monday or Tuesday, as domestic demand has been met, senior minister Luhut Pandjaitan said on Monday.

“End of today or tomorrow we can release some of the big vessels,” Luhut said in an interview with CNBC.

He said the government was also drawing up a new pricing structure for the so-called domestic market obligation, so the state utility firm PLN buys coal at market price.

Luhut’s comments come after the Philippines, Tokyo and Seoul urged Jakarta to ease its ban.

The Philippines’ Energy secretary Alfonso Cusi appealed to Indonesia to lift its coal export ban, saying the policy would hurt economies heavily reliant on the fuel for power generation, Manila’s Department of Energy said on Monday.

Indonesia, which is the world’s biggest thermal coal exporter, suspended exports on January 1 after its state power utility reported dangerously low inventory levels of the fuel at its domestic power stations.

The Philippines’ move followed similar requests from other Asian governments, such as Japan and South Korea.

Cusi made the appeal in a letter sent via the Department of Foreign Affairs to Indonesia’s Minister of Energy and Mineral Resources, Arifin Tasrif, the Energy Department said in a news release, without specifying when the letter was sent.

Cusi had asked the Foreign Affairs Department to intercede and appeal on behalf of the Philippines through the Association of Southeast Asian Nations (ASEAN) cooperation mechanism.

 

Coal Prices Higher

The ban drove coal prices in China and Australia higher last week, while scores of vessels slated to carry coal to major buyers such as Japan, China, South Korea and India have been in limbo off Kalimantan, home to Indonesia’s main coal ports.

The Philippines, which is still heavily dependent on coal for power generation, buys most of its requirements from Indonesia, and some, more expensive, supplies from Australia and Vietnam.

Nearly 70% of the 42.5 million tonnes of Philippine coal supply in 2020 was imported, according to government data.

Power generated by coal comprises about 60% of the country’s power mix, and in 2021 the country sourced 2.3 million tonnes per month from Indonesia to fuel its power plants, the Energy Department said.

Senator Win Gatchalian, who heads the Senate energy committee, has called on the Energy Department to prepare contingency measures because of the export ban, including looking for other potential suppliers.

 

‘Decision Soon’

Earlier on Monday, Indonesian Energy Minister Arifin Tasrif said the government hoped to reach a decision on coal shipments resumption in coming days.

“In the past week we have done stocktaking and we hope in coming days there will be more clarity so we can have coal security and resume exports,” he said in a bilateral meeting with Japan’s industry minister, Hagiuda Koichi, that was broadcast virtually.

 

 

  • Reuters with additional editing by Kevin Hamlin

This report was updated (twice) on January 10, 2022 with new details.

 

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Kevin Hamlin

Kevin Hamlin is a financial journalist with more than 40 years of experience covering Asia. Before joining Asia Financial, Kevin worked for Bloomberg News, spending 12 years as Senior China Economy Reporter in Beijing. Prior to that, he was Asia Bureau Chief of Institutional Investor for ten years.

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