The Indonesian Ministry of Energy and Mineral Resources (ESDM) plans to set up a coal fund agency - the Public Service Agency (BLU) - and to start collecting a new levy on coal producers as of the first quarter of 2023. The levy rate would be tiered based on the coal's calorific value and would be collected from coal companies based on their production. Proceeds from the levy would be used to pay the gap between the coal market price and the price cap for the Domestic Market Obligation (DMO).
Under the DMO, Indonesia, which relies on coal-fired power generation, forces coal miners to supply 25% of annual production to the state-owned power utility PT Perusahaan Listrik Negara (PT PLN) at a maximum price of US$70/t, well below the current global market prices (nearly US$390/t for Australian coal in October 2022). In addition, coal sold to local industries (such as cement and fertiliser companies) is capped at US$90/t, leading coal miners to poorly comply with the DMO.