The Dilemma Of Skyrocketing Coal Prices And DMO Policy, APBI Ensures Its Members Continue To Carry Out Obligations

Illustration. (Photo: Doc. Antara)

JAKARTA - The increasingly soaring price of coal has become a dilemma for members of the Indonesian Coal Companies Association (APBI). The reason is, the price of Domestic Market Bonds (DMO) is set at 70 US dollars per ton.

"If you look at the price disparity, this is really a dilemma for us entrepreneurs," said APBI Executive Director Hendra Sinadia when he was a speaker at the Market Review webinar on IDX Channel, Monday, March 7.

However, the association remains committed to fulfilling its obligations to continue to implement the coal sales contract to the State Electricity Company (PLN).

"The APBI has 70 members and contributes 70 percent to national production, from the start we were committed to continuing to do our duty," he continued.

The government sets the DMO amount to 25 percent of the planned annual coal production from each producer with a capping price of 70 US dollars per MT. However, Hendra said that in the last 3 years, the fulfillment of this obligation has missed the target set by the government.

"For the past three years, the realization has been below 25 percent. One of the reasons is because the demand is also below 25 percent," he said.

Hendra said that in the midst of this uncertainty, the association was slightly relieved by PLN's statement that PLN's coal supply was still within safe limits so that there would be no coal crisis.

"In response to this, the company complies with the implementation of supply to PLN and indeed there is a change in the system at PLN to record inventory. We are relieved that there is supply and it is still safe," he said.

Quoted from Antara, throughout February, coal prices have strengthened by 38.22 percent month over month. Entering March, the price of coal again stepped on the gas by touching the level of 446 US dollars per tonne.

Even if calculated on a year to date basis, coal prices have strengthened to 233.83 percent.