Coal producers required to prioritize meeting domestic needs

Jakarta (ANTARA News) - The government required all coal mining concessionaires to supply all of part of their coal to the domestic market.

Mineral and Coal Director General at the Ministry of Energy and Mineral Resources Simon Sembiring said in Jakarta on Friday that under the contracts with the government the coal producers are required to prioritize domestic consumption, then exports.

"This requirement is carried in the contracts," he said.

The coal production of the 34 coal mining concessionaires accounted for 80 percent of the total coal ouput of the country.

The governmetn has approved a coal production plan of six coal mining concessionaires for 2008 with a total volume of 147 million tons.

The six coal mining concessionaires are PT Kaltim Prima Coal 46.267 million tons, PT Adaro Indonesia 38 million tons, PT Kideco Jaya Agung 22 million tons, PT Arutmin Indonesia 20,304,134 tons, PT Berau Coal 14.134.600 tons and PT Indominco Mandiri 11,167,470 tons.

Earlier, a number of coal consuming companies in Indonesia, including state power company PT PLN had asked the government to introduce the domestic market obligation (DMO) to secure domestic coal supply.

PLN was worried that the coal supply to meet increased need for coal, especially after the operation of the coal-fired power plants (PLTUs) with a total capacity of 10,000 megawatts (MW) in the 2009-2010 period.

They asked the government to pioritize domestic supply, rather than exports.

Meanwhile member of the energy commission of the House of Representatives Tjatur Sapto Edy also asked the government to limit Indonesia`s coal exports with a view to securing domestic supplies.

He also urged the government to strongly deal with coal export price manipulation practices (transfer pricing)as these practices not only caused a loss to the state, but firm action would also limit coal exports.

Exports will indeed give large profits to the producers because they are exempted from royalty and tax payments.