Govt proposes establishment of coal buffer stock

The Ministry of Energy and Mineral Resources is proposing the establishment of a coal buffer stock in a bid to stabilize the coal supply in the domestic market, Investor Daily reported on Thursday.

"We are still studying the plan. We have yet submit the proposal to related government agencies especially the Minister of Finance," Director General of Geology and Mineral Resources Simon F. Sembiring.

He said that under the existing plan, the coal to be used as buffer stock would be taken from part of the royalties paid by coal mining companies to the government.

According to the existing regulation, a mining company has to give 13.5 percent of their production to the government as royalty -- 7 percent go to the local government and other 6.5 percent to the central government through the ministry of finance.

Sembiring said that the 6.5 percent of the royalty that should be paid to the central government could be used as buffer stock so that Indonesia would have enough stocks to meet the growing need in the domestic market, especially when there is a decline in the local supply from coal miners.

"We don't need to establish a company to manage the buffer stock. We can just hire a company to do the job," he added.(*)