Indonesia Considers Boosting Domestic Coal Allocation

Potential Increase in Domestic Market Obligation

The Indonesian government is contemplating a significant shift in its coal export policy by potentially increasing the Domestic Market Obligation (DMO) for coal producers beyond the current 25% of total production. Minister of Energy and Mineral Resources, Bahlil Lahadalia, revealed this plan during a recent statement, emphasizing the need to prioritize domestic needs over export commitments.

Priority Sectors for Coal Allocation

The government intends to allocate the increased domestic coal supply primarily to industries considered vital for public interest. These include:

1. State Electricity Company (PLN): Currently consumes between 140-160 million tons of coal annually
2. Fertilizer industry: Essential for agricultural production
3. Cement manufacturers: Critical for infrastructure development

Rationale Behind Policy Consideration

The proposed increase in DMO reflects the government's effort to ensure energy security and support domestic industries. With PLN alone consuming substantial quantities of coal, the government sees a need to secure sufficient supply for these critical sectors before allowing exports.

Implications for Coal Producers

If implemented, this policy could significantly impact coal producers' export strategies and revenue projections. Companies will need to adjust their production and distribution plans to meet the potentially higher domestic allocation requirements. The exact percentage of the proposed DMO increase remains under discussion, with the government weighing the needs of both domestic industries and export commitments.