Govt may slash down DMO quota

The government may ease the obligation for coal miners to supply domestic market under the so-called domestic market obligation (DMO) as the domestic users, including the country?s largest user the state electricity firm PT PLN, have failed to absorb the supply, .

The move could pave way for the country's coal producing companies to boost up its export.

Director General of Coal and Mineral at the Mineral and Energy Resources Ministry, Thamrin Sihite, as quoted by Kontan daily, said that the government would cut the amount on DMO after considering the low absorption by domestic users of the coal supplied under the DMO.

?We reduce the target of DMO because many of coal-fired power plants (PLTU) have not been operated yet,? he said.

The ministry?s spokesperson Susyanto however said that the office had not revised the ministerial Decree on the DMO.

?There are proposals to revise the DMO target but it is still under discussion,? he said.

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

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

Thamrin earlier 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. (*)