The government of Indonesia has decided to keep unchanged the mandatory coal sales to domestic power plant operators at 25% of the production and the price cap at US$70 per tonne in 2020.
In December 2019, it had announced that the domestic market obligation, which forces coal producers to allocate a minimum percentage of their output to the domestic market, might be reduced from 25% to 20% in 2020. Indeed, 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 has imposed a price cap on domestic sales of coal to power plants (US$70/t for coal over 6,000 kcal/kg, US$43/t between 4,500 and 6,000 kcal/ton, and US$37/t for less than 4,500 kcal/kg). 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.
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