Ministry issues decree on coal, mineral DMO
Friday, January 15 2010 - 02:40 AM WIB
The decree, signed on Dec. 31, 2009, states that the amount allocated for the so called domestic market obligation (DMO) in the prevailing year will be equal to the estimated annual demand proposed by potential domestic buyers in the previous year.
Both the producers and domestic consumers are bound to the DMO and failure to comply will result in sanctions. Sanctions will vary from a written reprimand to a production cut of up to 50 percent for producers, and up to 50 percent supply reduction for consumers in the following year if they failed to purchase the commodity at the agreed-on volume.
?No percentage has been fixed, but the amount of the production that has to be sold in the domestic market will be determined according to the domestic demand annually,? Director General for Minerals, Coal and Geothermal Bambang Setiawan said in Jakarta on Thursday.
He said that the amount of coal that each of the country's coal miners has to sell on the domestic market will be determined proportionately according to the domestic demand in the prevailing year.
According to the Energy and Mineral Resources Ministry?s estimate, this year?s coal production will reach about 250 million tons while the domestic demand is expected to reach 70 million.
The ministry initially planned to incorporate the DMO into one of the governmental regulations implementing the 2009 mining law, but it later decided to issue a ministerial decree to regulate the DMO.
?The (planned) implementing regulations will only provide macro policy, while the decree provides detailed guidelines for implementation,? Bambang said.
According to the Energy and Mineral Resources Ministry?s estimate, this year?s coal production will reach about 250 million tons while the domestic demand is expected to reach 70 million. (godang/bernard)