Govt may have to allow coal producers to transfer DMO quota

The government may have to allow coal producers to transfer its quota of domestic market obligation (DMO) to other coal miners since coal supply had exceeded domestic demand.

The transfer DMO credit could be done in business to business approach.

Director General for coal and mineral affairs Thamrin Sihite said that a number of local users, mainly the state utility company PT PLN could not absorb the demanded supply as some of its coal-fired plants under the 10,000 megawatt program have not started operation as originally scheduled.

?The coal supply quota set under the DMO has exceeded (the local demand) and some of them can not be absorbed,? Thamrin said as quoted by Investor Daily.

Under the 2009 Ministerial Decree on DMO, a sanction of 50 percent production cut would be given to coal producers in the following year for failing to meet its current year DMO quota.

The Decree stipulates the domestic demand reached 78.97 million tonnes in 2011 while the production was targeted 326.65 million tonnes. The DMO quota equals to 24 percent.

Thamrin said that a number of coal producers still failed to meet its quota and had sent letter to the Mineral and Energy Resource Minister Jero Wacik asking for dispensation.

?We are still evaluating it (the request for dispensation). What I propose is that coal producers could transfer their quota to other players in business to business mechanism,? he said.(*)