Indonesia Considers Boosting Domestic Coal Allocation

Potential Revision of DMO Policy

The Indonesian government is contemplating a significant shift in its coal distribution policy by potentially increasing the Domestic Market Obligation (DMO) for coal producers. Minister of Energy and Mineral Resources, Bahlil Lahadalia, expressed support for revising the current DMO requirement during a parliamentary hearing on November 11, 2025. The existing regulation mandates coal companies to allocate at least 25% of their production to domestic needs, as stipulated in Ministerial Decree No. 267.K/MB.01/MEM.B/2022.

Rationale Behind the Proposed Change

Bahlil emphasized that the proposed increase would prioritize national interests, suggesting that the current 25% minimum might not be sufficient for domestic requirements. The minister's statement during the Commission VII DPR meeting indicated a potential revision of the RKAB (Rencana Kerja dan Anggaran Perusahaan) DMO allocation, possibly setting it higher than the current 25% threshold. This move aligns with the government's efforts to ensure energy security and meet growing domestic demand.

Implications for Coal Producers

The potential increase in DMO could have significant implications for coal producers operating in Indonesia. Companies would need to reassess their production and distribution strategies to comply with the revised regulations. While the exact percentage of the proposed increase remains unclear, the government's inclination towards a higher DMO reflects its commitment to securing domestic energy supplies.

Regulatory Context and Future Outlook

The current DMO regulation was established to ensure a stable supply of coal for domestic needs, particularly for power generation and industrial purposes. Any revision to this policy would likely follow a comprehensive review of the country's energy requirements and production capacities. Stakeholders in the coal industry will be closely monitoring developments regarding this potential policy shift, as it could impact their operational and business strategies in the coming years.