Impact Of The COVID-19 Pandemic, Airlangga Hartarto: Domestic Coal Consumption Drops

Coordinating Minister for Economic Affairs, Airlangga Hartarto. (Photo: Twitter @airlangga_hrt)

JAKARTA - The Coordinating Minister for the Economy Airlangga Hartarto projects that the absorption of coal for the domestic market obligation (DMO) will only reach around 90.9 percent of the target.

Airlangga explained, the weakening of coal absorption in the country this year was due to the impact of the spread of COVID-19. Due to the pandemic, the performance of the mining sector until August 2020 experienced a contraction.

"The target for new domestic coal demand is 155 million tons, but (demand) for domestic is estimated to only reach 141 million tons," he said, at the APBI-ICMA Award 2020 event which was held virtually, Tuesday, October 27.

Not only did demand decline, Airlangga said, the impact of the COVID-19 pandemic, the price of coal commodities had decreased from 66.89 US dollars in February, down 35.95 percent or only 49.42 US dollars in September 2020.

"Likewise, the coal export target, the target of 395 million tons per October, has only reached 58.51 percent or 232.3 million tons," he explained.

For your information, the government is targeting the absorption of coal for domestic purposes this year to reach 155 million tons, of which 70 percent is allocated for power plants that reach 109 million tons.

Then 10.6 percent or about 16.52 million tons for processing and refining needs, 9.4 percent or about 14.54 million tons for cement, then for textile and paper factories each allocated 6.54 million tons, and for fertilizer factories of 1.73 million tons.

PT Perusahaan Listrik Negara (Persero) or PLN as the company that absorbs the largest coal also reduces its consumption. This is because the impact of the COVID-19 pandemic has reduced electricity consumption. This condition then made PLN's coal demand reduced along with the reduced PLTU operation.

Head of the PLN Coal Division, Harlen, in a virtual discussion, explained that this year, PLN actually needs 109 million tons of coal. However, due to the pandemic, demand fell to 95.6 million tonnes.

Harlen also projects that next year PLN will only need coal of 98.01 million tons. The use of PLN coal is a 2 year delay.

In the moderate post-COVID scenario of PLN, the coal demand for PLTU next year is estimated to only reach 98.01 million tons from the original estimate of 120.53 million tons and in 2022 only 103.72 million tons from the original estimate of 128.54 million tons.

Then in 2023, the projected demand for coal will be corrected from 135.13 million tonnes to 109.57 million tonnes and corrected from 136.77 million tonnes to 116.44 million tonnes in 2024.

The demand for coal for PLN's PLTU is estimated to start with an increasing trend from 2025 to 2029. The projections are 121.98 million tons in 2025, 128.30 million tons in 2026, 134.88 million tons in 2027, 141.42 million tons in 2028, and 147.32 million tonnes in 2029.