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Energy Ministry fixes 2020 coal DMO with new penalty mechanism

Jakarta Post - January 7, 2020

Norman Harsono, Jakarta – The Energy and Mineral Resources Ministry has fixed this year's coal domestic market obligation (DMO) rate at 25 percent of each mining company's production with a selling price of US$70 per ton for power production.

Energy ministry spokesman Agung Pribadi said on Tuesday that the latest DMO rate, stipulated under Ministerial Decree No. 261/2019 issued on Dec. 26, included a new punishment mechanism for noncompliant companies. Otherwise, the rates were unchanged from last year.

"If the previous policy slashed [a noncompliant company's] production quota for the following year, this time we will impose a compulsory compensation for the shortfall in domestic sales," he said.

Indonesia introduced the policy to suppress electricity production costs. The policy is designed to make electricity cheaper but also reduce renewable energy's competitiveness.

Mining companies have also criticized the price cap as damaging to global coal prices. The ministry-issued coal reference price shows that global prices steadily declined throughout last year from $92.41 per ton in January 2019 to $66.3 per ton in December 2019.

Source: https://www.thejakartapost.com/news/2020/01/07/energy-ministry-fixes-2020-coal-dmo-with-new-penalty-mechanism.html