Perhapi urges MEMR to revise coal DMO price amid production cuts

The Indonesian Mining Professionals Association has called on the Indonesian Ministry of Energy and Mineral Resources (MEMR) to revise the long-standing domestic market obligation (DMO) coal price, arguing that rising production costs and lower output quotas are putting pressure on miners.

The association, known as Perhimpunan Ahli Pertambangan Indonesia (Perhapi), said the fixed DMO price has not been adjusted since it was introduced in 2018, despite significant increases in mining costs.

Perhapi chairman Sudirman Widhy Hartono said the DMO price remains capped at US$70 per tonne for electricity supplied to PT Perusahaan Listrik Negara (Persero) (PLN), and US$90 per tonne for fertilizer and cement industries.

 “Costs in coal mining have risen compared with conditions in 2018. We suggest that the DMO price should be evaluated and reviewed,” Sudirman said on Wednesday (Feb. 18, 2026), as quoted by Bloomberg Technoz.

He noted that the DMO price gap with global market levels—currently around US$105–US$110 per tonne—has widened considerably, squeezing miners’ margins.

Production cut raises DMO burden

Perhapi linked the urgency of a price revision to the government’s plan to reduce the 2026 coal production quota (RKAB) to around 600 million tonnes, down from last year’s realized output of 790 million tonnes.

Read also : MEMR grants 100% coal quotas to PKP2B Gen-1 and SOEs

At the same time, the DMO allocation is expected to be raised to at least 30% of total production. With domestic coal demand estimated at around 200 million tonnes, that would account for roughly one-third of national output under the new quota.

 “The increase in the DMO percentage is a consequence of the lower production target,” Sudirman said.

Rising costs

According to Perhapi, mining costs have climbed due to several factors, including higher stripping ratios at many mine sites, increased fuel expenses following the implementation of the B40 biodiesel mandate, and the introduction of additional levies and contributions.

Under the current policy, the US$70 per tonne cap applies to coal supplied to PLN with a reference calorific value of 6,322 kcal/kg GAR (gross as received). Lower-grade coal is subject to lower caps—around US$43 per tonne for 4,500–5,900 kcal/kg GAR and approximately US$37 per tonne for coal below 4,500 kcal/kg GAR.

The DMO price functions as a subsidy mechanism for domestic electricity generation when the Coal Reference Price (HBA) exceeds the capped level, which has been the case since the policy was implemented.

Government stance

However, the Energy and Mineral Resources Ministry has indicated there are no immediate plans to revise the DMO price.

 “Not yet [any revision],” said Tri Winarno, Director General of Mineral and Coal on Feb. 12.

Tri added that the ministry has requested first-generation Coal Contract of Work (PKP2B) holders and state-owned enterprises to supply 75 million tonnes of coal for DMO in the first half of 2026 to ensure sufficient supply for PLN.

Companies holding first-generation PKP2B contracts—including PT Arutmin Indonesia, PT Kaltim Prima Coal (KPC), PT Adaro Andalan Indonesia (AADI), PT Kideco Jaya Agung, PT Multi Harapan Utama (MHU), PT Tanito Harum and PT Berau Coal—are not subject to RKAB reductions and have been asked to front-load at least 30% of their production for domestic supply.

The early DMO allocation is intended to secure coal supply for PLN during the first semester, while the government finalizes RKAB approvals for other mining companies.

As debate continues, miners warn that without adjustments to the DMO pricing formula, the combination of higher mandatory domestic supply and lower production quotas could further compress profitability across the sector.

Editing by Reiner Simanjuntak