Indonesia: Govt mulls plan to form new entity to collect coal levies

  • The Energy and Mineral Resources Ministry is mulling a plan to form a special entity that collects coal levies to improve coal producers’ compliance with the domestic market obligation (DMO) policy.
  • The levies will cover the difference between the DMO price of USD70 per ton and market prices, which have reached above USD100 per ton since Jul 21.
  • The coal mining industry blamed this price difference for their noncompliance. Mining law expert Ahmad Redi said effective DMO governance would require the government to tighten its monitoring and sanctions policy.
  • The legal entity that could collect fees in accordance with the State Treasury Law is a public services agency (BLU).
  • “If the scheme involves collecting levies from mining companies, [it is expected] to lead to the formation of a BLU,” Ahmad told The Jakarta Post.
  • Plans to improve DMO governance were taken after the government began on 1 Jan 22 a month-long ban on coal shipments to address a shortage in PLN’s coal stocks that could have led to widespread blackouts.
  • The ban drove coal prices in China and Australia higher in Jan 22. Now that the coal ban has been lifted, the Office of the Coordinating Maritime Affairs and Investment, Trade Ministry, Energy Ministry and state-owned electricity monopoly PLN still need to determine how to ensure long-term DMO compliance.
  • The head of the Finance Ministry’s Fiscal Policy Agency, Febrio Nathan Kacaribu, said that the ministry was preparing new regulations on penalties for noncompliance.
  • Lawmakers from House of Representatives Commission VII, which oversees energy, mining and research, and Energy Minister Arifin Tasrif on 16 Feb 22 agreed on a plan to form a special entity to collect levies using a “gotong royong” (mutual cooperation) scheme to ensure adequate coal supplies and cover the difference between the coal market price and the DMO price.
  • Commission VII member Maman Abdurahman of the Golkar party said that under the scheme, PLN would continue to buy coal from coal producers at a set price of USD70 per ton.
  • “However, [the scheme] would determine the supplying company to fulfill PLN’s quota. The difference between the coal market price and the DMO benchmark price would then be covered through levies,” said Maman.

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