DMO coal to be allocated for domestic increase next year

The government will allocate about 78 million of the country?s coal production for the local market, higher compared to this year?s target of 68.5 million tons to cope with the surge in the demand from coal-fired power plants.

Bambang Gatot Ariyanto, the Director General of Coal and Geothermal at the Energy and Mineral Resources Ministry, said in Jakarta on Thursday that the coal allocation had been fixed in line with the domestic market obligation (DMO) imposed on coal producers.

Under the DMO regulation, coal producers are obliged to sell part of their production to the domestic market. The volume of coal that has to be sold to the local market is adjusted annually in accordance with the production and demand.

Under the DMO regulation, producers are obliged to sell at least 25 percent of their production to the domestic market. Coal companies which do not abide the DMO regulation are prohibited from exporting.

?The allocation of coal sales for the domestic market for 2010 had been fixed. It just waits for an approval from the minister,? he said.

Coal production is projected to increase to 250 million tons next year from 230 million tons this year. The demand is also estimated to increase next year due the operation of several new coal-fired power plants. The demand from power producers alone is expected to reach between 46 million tons and 47 million tons next year. (*)