The government of Indonesia said it might reduce the domestic market obligation, which forces coal producers to allocate a minimum percentage of their output to the domestic market, from the current 25% to 20%. As domestic demand, mainly from the state-owned electric company PT Perusahaan Listrik Negara (PLN), is limited, and the output increasing, coal producers are struggling to comply with the domestic obligation. According to the Indonesian government, around 124 Mt of coal were estimated to be sold to local buyers in 2019, whereas the target was 128 Mt.
Since 2018, Indonesia imposes a price cap on domestic sales of coal to power plants (US$70/t for coal over 6,00 kcal/kg, 43 US$/t between 4,500 and 6,000 kcal/ton, and 37 US$ /t for less than 4,500 kcal/kg), which should stay at the same level in 2020. The share of coal in the domestic power mix has increased from 36% in 2000 to 61% in 2018, while the electricity sector accounts for around 84% of coal and lignite consumption and the remainder goes to the industry. Indonesia promotes the use of coal in the household sector as a substitute for imported LPG.