Govt plans to loosen coal DMO policy

As part of an ongoing revision of Minister of Energy and Mineral Resources Regulation No 34/2009, the government plans to loosen the domestic market obligation (DMO) for coal miners starting 2015, applying the DMO only to miners producing coal with calorific value that meets requirements of local consuming industries, Kontan daily reported Wednesday.

Director General of Mineral and Coal R. Sukhyar was quoted as saying that the revision would be completed in the middle of this year. ?The (new DMO) policy will be applied starting 2015,? he said.

Under the current DMO policy, all coal miners in the country are obliged to allocate part of their output for domestic market. The DMO is set by the Ministry of Energy and Mineral Resources after estimating the demand of local consuming industries including power plants and cement companies, which then allocates quota for each coal producers. For the financial year 2014, for instance, PT Adaro Energy is allocated a DMO quota of 12.9 million tons, while PT Kaltim Prima Coal 13.1 million tons, and PT Arutmin Indonesia 7.1 million tons.

State-owned electricity company PLN requires a total of 57.4 million tons of coal this year with calorific value ranging from 4,000-6,200 kcal/kg, while independent power producers need a combined 19.9 million tons with calorific value ranging from 4,000 to 5,200 kcal/kg, and cement companies need a total of 9 million tons with calorific value of 4,200-6,300 kcal/kg, the paper said.

But not all coal miners produce coal with the required specifications, which then triggers trading of quota among producers to meet the DMO. ?After the revision, the quota trading will no longer be allowed,? Sukhyar said. (*)