Manufacturers Must Sell 25% of Coal Domestically & Price US$ 70

Jakarta, CNBC Indonesia – The Ministry of Energy and Mineral Resources (ESDM) has just released the Decree of the Minister of Energy and Mineral Resources No.139.K/HK.02/ MEM.B/2021 concerning the Fulfillment of Domestic Coal Needs.

This regulation was stipulated by the Minister of Energy and Mineral Resources Arifin Tasrif on August 4, 2021.

This Decree of the Minister of Energy and Mineral Resources stipulates the percentage of coal sales for domestic needs (domestic market obligation/ DMO) of 25% of the planned annual coal production of each producer approved by the government. The coal is intended to provide electricity for public and private purposes, as well as for raw materials or fuel for industry.

The obligation to sell coal for the 25% DMO is stated to apply to holders of Mining Business Permits (IUP) for the Coal Production Operation stage, Special Mining Business Permits for the Coal Production Operation stage, Coal Mining Concession Work Agreements (PKP2B) for the Production Operation stage, and Special Mining Business Permits (IUPK) as Continuation of Contract/Agreement Operations.

“Holders of a Mining Business Permit for the Coal Production Operation stage, a Special Mining Business Permit for the Coal Production Operation stage, a Coal Mining Concession Work Agreement for the Production Operation stage, and a Special Mining Business Permit as Continuation of Contract/Agreement Operations are required to fulfill the percentage of coal sales. for domestic needsdomestic market obligation),” said the Decree.

In case of urgency, if domestic coal needs are not met, the Director General of Mineral and Coal on behalf of the Minister of Energy and Mineral Resources may appoint IUP or IUPK or PKP2B holders or Coal Transportation and Sales Permits to meet domestic coal needs.

The selling price of coal for DMO is set at US$ 70 per ton. The following is the contents of the seventh point of this Decree of the Minister of Energy and Mineral Resources:

“Setting the selling price of coal for the provision of electricity for public purposes at US$ 70 per metric ton Free On Board (FOB) Vessel, which is based on the reference specifications on calories 6,322 kcal/kg GAR, Total Moisture 8%, Total Sulfur 0.8%, and Ash 15% with the provisions listed in the Appendix which is an integral part of this Ministerial Decree.”

If the Reference Coal Price (HBA) is more than or equal to US$ 70 per ton, the selling price of coal for the supply of electricity for the public interest is US$ 70 per ton.

If the HBA is less than US$ 70 per tonne, then the selling price of coal for supplying electricity for the public interest refers to the HBA.

Then, business entities that provide electricity for the public interest are also required to make plans for meeting coal needs every year by prioritizing the mechanism of long-term contracts.

“This Ministerial Decree comes into effect on the date of stipulation (4 August 2021),” reads the 12th point of this ESDM Ministerial Decree.

[Gambas:Video CNBC]

(wia)


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