26/06/26
Indonesia rules out coal export curbs
Singapore, 26 June (Argus) — Indonesia does not plan to introduce additional
restrictions on coal exports, with the government focused on enforcing existing
regulations to meet supply requirements of state-owned utility PT Perusahaan
Listrik Negara (PLN), the energy ministry (ESDM) said. "There is no new proposal
to introduce additional restrictions, as the necessary regulatory framework is
already in place," the ministry told Argus on 26 June. Authorities will instead
ensure "effective implementation" of provisions under the domestic market
obligation (DMO). The response comes after energy minister Bahlil Lahadalia said
on 25 June that some coal shipments earmarked for export were being held back on
the direct order of President Prabowo Subianto to prioritise domestic supply to
PLN's power plants to address shortages at state-owned utility PLN that have
triggered blackouts across Java. The minister's comments revived memories of
late 2021 , when a similar supply crunch prompted a full export ban in January
2022, jolting global coal markets. The Directorate General of Mineral and Coal
(Minerba) had temporarily withheld certain export shipments to ensure the
availability of coal with the required calorific value for PLN's primary energy
needs. "The volume of exports temporarily withheld was adjusted based on PLN's
operational requirements," the ministry said, adding that with domestic supply
conditions now improving, coal exports are proceeding normally. The temporary
export diversion took place as part of the regulatory oversight function, ESDM
said, rather than as a punitive or market-wide measure. The move to hold back
some coal exports in favour of domestic supply has injected fresh uncertainty
into the seaborne market with lingering concerns on more shipments making way to
meet PLN's growing demand, especially during the peak summer season with the El
Nino weather pattern aggravating the temperatures and power consumption. Supply
contracts totalling about 141mn t has already been secured against PLN's total
annual requirement of 154mn t, leaving a 13mn t gap, ESDM said, reiterating a
shortfall acknowledged by the minister on 25 June. PLN's primary energy
procurement would be subject to enhanced scrutiny to ensure its fuel
requirements are met, ESDM said. The oversight would be undertaken by
authorities including representatives from the Financial and Development
Supervisory Agency (BPKP), ESDM, the Directorate General of Mineral and Coal,
and PLN. "Such oversight is a normal and necessary regulatory function to ensure
that the DMO policy is effectively implemented, particularly in securing coal
supply for PLN's primary energy requirements," the ministry said. The enhanced
scrutiny comes as Jakarta scrambles to address shortages at PLN that have
triggered blackouts across Java. It would add to a series of measures taken by
the government to boost its oversight of the sector including coal producer's
DMO performance. Indonesia might also review this year's production quotas, or
RKABs, in July, according to market participants. The regulatory steps extend
beyond domestic supply. Indonesia has set up a state-owned entity, Danantara
Sumberdaya Indonesia, to centralise coal exports, although authorities later
clarified that the company would mainly focus on monitoring trades to prevent
under-invoicing. All exports are expected to be channelled through the new
entity, in line with the original plan announced last month. Quality vs quantity
The current shortage stems less from an absolute lack of supply than from a
mismatch in coal quality. The gap lies specifically in medium-calorific value
(CV) coal above GAR 5,000 kcal/kg, which PLN uses to blend with lower-grade
supply to maintain boiler performance, Bahlil said. While DMO volumes appear
sufficient on paper — with 180mn–190mn t allocated and 160mn–170mn t committed —
domestic deliveries have been skewed toward lower-CV coal, with mid-CV material
likely being absorbed by the export market. Indonesia's 2026 production quotas,
or RKABs, were cut to around 600mn t from 817mn t in 2025, tightening overall
supply headroom and adding pressure on availability of specific grades for the
domestic market. Indonesia exported 151.1mn t of all types of coal in
January-April , down by 6.9pc from a year earlier, while output in the first
four months of 2026 is estimated at 230mn–235mn t, down from a revised 250.5mn t
in the same period of 2025. Industry bodies point to the DMO pricing regime as a
root cause of the supply crunch. The government caps coal sold to power
utilities at $70/t for GAR 6,322 kcal/kg — a level unchanged since 2018 — while
the benchmark HBA price for the same grade currently stands near $124/t. For
medium-grade coal, the effective DMO price falls to around $35–40/t against an
HBA benchmark of roughly $60/t, leaving producers with negligible or negative
margins on compliant supply. The Indonesian mining professionals' body,
Perhimpunan Ahli Pertambangan Indonesia (Perhapi), has proposed raising the DMO
price to $80–90/t, while the Indonesian Coal Mining Association (APBI) has
called for a periodic adjustment mechanism linking DMO prices to a percentage of
the HBA. By Saurabh Chaturvedi Send comments and request more information at
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