Anwar Ispat

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17 January 2022


Business Insider Bangladesh
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Indonesia allows 37 coal ships to leave as export ban eased

BI Desk || BusinessInsider

Published: 16:36, 13 January 2022  
Indonesia allows 37 coal ships to leave as export ban eased

Photo: Representational

KSRM

Indonesia allowed 37 vessels loaded with coal to depart on Thursday in the strongest sign yet that the world’s biggest thermal coal exporter is relaxing its ban on shipments.

A senior cabinet minister said in a statement the ban implemented on January 1 had been eased for miners that have met a requirement to sell a portion of their output for local power generation, after the state utility procured enough coal to ensure 15 days of operation, reports Reuters.

“I request that this is supervised closely so this also becomes a moment for us to improve domestic governance,” Coordinating Minister of Maritime and Investment Affairs Luhut Pandjaitan said in the statement on Thursday.

The 37 vessels included 14 ships whose clearance was announced earlier in the week.

The ships can carry a total of about 1 million tonnes of coal, a spokesperson for Luhut said. That compares to exports of around 30 million tonnes of coal in January of 2021 and 2020.

Indonesia set the export ban after state power company Perusahaan Listrik Negara (PLN) reported critically low coal stocks at power plants and said Indonesia was on the brink of widespread power outages. The ban sent shockwaves through global energy markets, especially in Indonesia’s largest coal customers, including Japan and South Korea.

Indonesian authorities blamed its coal supply crisis on miners failing to meet a Domestic Market Obligation (DMO), which requires them to sell 25% of output to local buyers with a price cap at $70 per tonne for power plants.

The government has been lobbied by coal miners and some of its biggest buyers to ease the export ban.

There were about 120 vessels either loading or waiting to load off Indonesian’s coal ports in Kalimantan on the island of Borneo on Wednesday, according to Refinitiv Eikon data.

“We recognise that allowing loaded ships to depart is a small step in easing and progress needs to be made towards lifting the export ban,” research group CreditSights said.

“Indonesia’s government will monitor DMO compliance every month, which we think will help to avoid the abrupt imposition of coal export bans in the future,” it said in a note.

Miners face fines

Energy minister Arifin Tasrif in a parliamentary hearing on Thursday was asked about the DMO implementation and export ban, while a number of parliament members called for greater transparency over DMO compliance.

“The plan of easing the coal export ban is taking place and will continue to be evaluated and we will ensure that the vessels that have been allowed to export are those which have fulfilled the DMO,” Arifin told parliament members.

The investment ministry said in its statement that mining companies that had met their sales contract with PLN and 100% of their DMO requirements for 2021 would be allowed to begin exporting.

Without naming the companies, Arifin said there were 47 miners which had surpassed their DMO requirement and 32 miners which had fulfilled between 75% to 100% of their domestic responsibilities.

Miners that had not fulfilled their PLN contracts and DMO would face fines, he added.

Citi in a research note on Jan. 5 estimated around 490 out of 631 coal miners in the country had not yet fulfilled their DMO obligation. These 490 coal miners represent about 35%-40% of Indonesia’s total production, it said.

Indonesia’s two largest coal groups, PT Bumi Resources and Adaro Energy (ADRO.JK), as well as state coal miner Bukit Asam (PTBA.JK), were among companies who said in stock exchange filings they have met DMO requirements.

Bumi Resources director Dileep Srivastava said on Thursday the company was awaiting formal confirmation from the government but said an easing would be a positive development.

An Adaro spokesperson said its ships were yet to leave port as of Thursday morning.

 

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