Indonesia Considers Boosting Domestic Coal Supply Requirement

Potential Revision of Domestic Market Obligation

The Indonesian government is contemplating a significant shift in its coal policy by potentially increasing the Domestic Market Obligation (DMO) requirement beyond the current 25% of total production. Minister of Energy and Mineral Resources, Bahlil Lahadalia, stated that the government might revise the current regulation to prioritize domestic needs over exports.

Rationale Behind the Proposed Change

The proposed revision aims to ensure that the country's natural resources are utilized primarily for national interests. Bahlil emphasized that the government's priority is to meet domestic demand before fulfilling export commitments. The minister suggested that the DMO could be set higher than 25%, although no specific percentage was mentioned.

Implementation Through RKAB Revision

The potential increase in DMO is expected to be implemented through a revision of the Work Plan and Budget (RKAB). This regulatory change will likely affect coal mining companies operating in Indonesia, particularly those holding Production Operation IUP, Special IUPK for coal, and Coal Mining Business Contracts in the production stage.

Impact on Coal Industry

The proposed policy change could have significant implications for both domestic supply and export dynamics. While it may ensure greater availability of coal for domestic needs, it could also potentially reduce the volume available for export. This shift might affect Indonesia's position in the global coal market and could influence the revenue generated from coal exports.