Coal firms to be banned from exporting if fail on DMO: Draft decree

The government will ban coal firms from exporting their products and also set limits on their production if they fail to meet their domestic market obligation (DMO), according to a draft ministerial decree.

?If a coal mining company fails to meet the Minimum Percentage of Domestic Coal Sales for one year, the firm will only be allowed to produce coal the following year as much as they are required to meet the Minimum Percentage of Domestic Coal Sales for the year,? reads the copy of the draft decree made available to Petromindo.Com.

Under the decree which is being discussed in the ministry, the Director General of Coal, Mineral and Geothermal (representing Minister of Energy and Mineral Resources), together with power generation firms, the associations of coal industrial users, the associations of coal firms and the associations of coal traders and other stakeholders will meet every June to determine the Minimum Percentage of Domestic Coal Sales for the following year.

The percentage is calculated by dividing the estimated domestic coal demands by the estimated domestic coal output. This means the whole domestic demands should be met by the local coal producers.

Once the percentage figure is determined and officially endorsed by the Director General, coal producers have until November to clinch sales-and-purchase agreements with domestic buyers or traders. In November, each of the coal firms have to submit their respective Budget and Work Plan to the director general, which also specifies the amount of their DMO for next year as well as the buyers of the coal.

A firm can meet its DMO by selling the coal itself to end buyers or traders or, otherwise, ask other coal producers to do so on its behalf.

The price is based on the Coal Price Reference to be determined by the minister through a decree.

The Director General will review the implementation of the DMO every three months by the end of March, June, September and December, while each of the coal firms have to make a report on their DMO implementation every three months by the end of April, August and September.

In case, a coal firm can not fully meet its DMO in the first three months, it has to add the arrears to its DMO for the next three months. If it can?t fully meet its DMO in the second three months, it has to add the arrears for the following three months. If however it can?t fully meet its DMO for one year, it will be only allowed to produce as much as their DMO for the following year.

Under the draft decree, the Director General is authorized to issue two types of license for coal traders: license for domestic coal trade and license for foreign coal trade (export and import). A trader can only have one type of license. (Bodega)