Energy Observer From UGM Reminds Coal Entrepreneurs To Obey DMO's Obligations: If You're Greedy, Get Ready For Another Crisis

Illustration. (Photo: Doc. Antara)

JAKARTA - Energy economy observer from Gadjah Mada University (UGM) Fahmy Radhi reminded coal entrepreneurs to comply with the domestic market obligation (DMO) amid the current world price spike.

"Coal entrepreneurs should not be greedy in reaping profits by exporting all production, without supplying coal to PLN, which has caused a coal crisis at PLN as happened before", Fahmy said in his statement, quoted from Antara, Monday, March 7.

Under the DMO provisions, entrepreneurs are required to sell coal to PLN for 25 percent of the total production for 70 US dollars per metric ton. If greedy entrepreneurs ignore DMO, explained Fahmy, then the coal crisis at PLN will happen again.

To prevent DMO neglect, PLN has developed an integrated monitoring system with the Ministry of Energy and Mineral Resources (ESDM).

The results of this monitoring become the basis for the government to impose sanctions in the form of export bans, production bans, and revocation of business licenses for coal entrepreneurs who do not meet the DMO.

"The Ministry of Energy and Mineral Resources must dare to apply strict sanctions for entrepreneurs who ignore the DMO provisions, regardless of who owns the coal company", said Fahmy.

The geopolitical conflict between Russia and Ukraine has not only caused world oil and gas prices to soar but has also pushed up coal prices because Russia is one of the largest coal exporters to countries in Europe.

According to Fahmy, the increase in oil and gas prices has made European countries return to using coal for power generation, thereby increasing demand which has fueled the increase in world coal prices.

In February 2022, coal prices have shot up by 38.22 percent month over month. Meanwhile, in early March 2022, the price of coal skyrocketed again to touch the figure of 446 US dollars per metric ton.

Indonesia benefits from the increase in coal prices through foreign exchange earnings and entrepreneurs benefit from coal export activities because the cost of production is in the range of 30 to 40 US dollars per metric ton.

"The large increase in profit will certainly increase share prices for all issuers of coal companies that sell their shares in the capital market. Even the opportunity for the coal export market in Europe, which has been supplied by Russia, is increasingly open", said Fahmy.