Indonesia: After coal, government pushes DMO on gas for electricity

  • After introducing its domestic market obligation (DMO) policy for coal on 12 Mar 18, the government is going forward with its plan to introduce a DMO for gas in an effort to reduce electricity prices.

  • Energy and Mineral Resources Ministry Electricity Director General Andy N. Sommeng said in Jakarta on 17 May 18 that the DMO was expected to take effect by end-2018.

  • He said that gas was the most efficient option for electricity production in outermost, frontline and disadvantaged regions, most of which are not connected to the main networks of state-owned electricity company PLN.

  • Andy said the government had considered the impact of the policy on the upstream gas sector to not be too significant because many gas companies had operated for about 30 years and had by now reached breakeven point.

  • He said the ideal gas price for power plants should be USD7 per million British thermal units (mmbtu), while the current prices ranged between USD10 and USD11 per mmbtu.

  • Under the DMO policy on coal that has been in effect since 12 Mar 18, the domestic coal price is set at USD70 per metric ton. Coal-fired power plants (PLTU) contribute about 57% to national electricity production.

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