Indonesia to Form Special Coal Entity in June

TheIndonesia.id - The government will establish a special coal entity as a strategic step to resolve the domestic coal supply problem in the long term, Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif has informed. The special coal entity will be formed in June 2022 through direct coordination with the Coordinating Ministry for Maritime Affairs and Investment, he said on Thursday.

"This special entity is still in progress to be institutionalized. It is targeted to finish in June," Tasrif said, Thursday, April 14, 2022.

Business associations will be involved in the formation of the special entity for coal, he said. The Chamber of Commerce and Industry (Kadin) has been assigned to gather all its members, and later, there will be several programs that will be carried out by the institution.

"Later, the assignment will be given to several large miners. The price disparity will be covered through fees and the amount of the contribution will depend on the capacity and specifications of the company," Tasrif explained.

The government has decided to form a special coal entity to ensure domestic coal supply. The agency will later be tasked with collecting fees, under applicable regulations, to cover the difference between the coal price in the market and the Domestic Market Obligation (DMO) price of US$70 per ton.

Through the special entity, the fulfillment of DMO coal, both in terms of volume and revenue, will be carried out under a mutual cooperation scheme.

Deputy chairperson of Commission VII of the Indonesian House of Representatives (DPR RI), Maman Abdurrahman, said the formation of a special coal entity is a political decision based on the recommendations of Commission VII and the Ministry of Energy and Mineral Resources.

The agency could become a long-term solution for resolving DMO, including additional obligations in the form of a domestic price obligation (DPO), which has now become a contentious issue, he added. Abdurrahman said he hopes that a special coal entity will be formed soon to resolve various problems experienced by both the upstream and downstream coal industries.