Lawmakers urge higher coal DMO share to 30% to safeguard energy security

The House of Representatives (DPR) has urged the Ministry of Energy and Mineral Resources (MEMR) to raise the Domestic Market Obligation (DMO) for coal producers to 30%, up from the current 25%, to safeguard domestic energy supply following the government’s plan to cut coal output in 2026.

Commission XII member Yulian Gunhar said the proposed increase is a logical consequence of Energy and Mineral Resources Minister Bahlil Lahadalia’s decision to lower the national coal production target from 790 million tonnes in 2025 to around 600 million tonnes in 2026. Under Ministerial Decree No. 267.K/2022, coal miners are currently required to allocate at least 25% of production to the domestic market.

“PLN’s domestic coal requirement for DMO is around 240 million tonnes. If production is limited to 600 million tonnes, a 25% DMO will not be sufficient. The solution is to raise the DMO share to 30%,” Yulian said during a hearing with the ministry in Jakarta on Thursday (Jan. 22).

He added that the adjustment needs to be mapped out immediately, as national coal production is dominated by seven to eight large companies that control more than half of total output. He stressed that domestic supply security must be maintained even as the government seeks to improve fiscal conditions, with Indonesia’s fiscal deficit recorded at 2.92% of gross domestic product.

Read also: Govt considers raising coal DMO share after 2026 output cut

Responding to the proposal, Minister Bahlil reiterated the government’s commitment to prioritizing domestic demand over exports. He said the government is prepared to reassess DMO limits to ensure sufficient supply for strategic domestic industries, including state utility PLN, fertilizer producers, cement manufacturers, and mineral smelters.

“There should be no rigid cap on the DMO. If supply is still insufficient, we will raise it again. Businesses should not dictate policy to the state. The state sets the rules,” Bahlil said.

Bahlil explained that production controls through the Work Plan and Budget (RKAB) approval process are aimed at rebalancing the global coal market. Indonesia currently supplies around 43% of global coal exports, or roughly 516 million tonnes, but prices have remained under pressure due to oversupply.

“When oversupply occurs and demand is not strong, prices inevitably fall. That’s basic supply and demand,” he said.

Despite the focus on stabilizing global prices, Bahlil stressed that the policy shift would not compromise national interests. Ministry data show that Indonesia produced 836 million tonnes of coal in 2024, with DMO realization of 233 million tonnes. In 2025, DMO reached 254 million tonnes out of total production of 790 million tonnes.

“Electricity, DMO, fertilizer, cement, and smelters—all domestic needs must be fully supplied. We represent the people of Indonesia, not global markets,” Bahlil said.

Editing by Reiner Simanjuntak