Indonesia relaxes export ban to allow 37 coal vessels to depart

Fransiska Nangoy and Bernadette Christina, Reuters

Posted at Jan 13 2022 01:12 PM

Coal barges are pictured as they queue to be pulled along Mahakam river in Samarinda, East Kalimantan province, Indonesia, August 31, 2019. Picture taken August 31, 2019. REUTERS/Willy Kurniawan/File Photo
Coal barges are pictured as they queue to be pulled along Mahakam river in Samarinda, East Kalimantan province, Indonesia, August 31, 2019. Picture taken August 31, 2019. REUTERS/Willy Kurniawan/File Photo


JAKARTA - Indonesia, the world's biggest thermal coal exporter, has allowed 37 loaded coal vessels to depart after they secured approvals from authorities, the Coordinating Ministry of Maritime and Investment Affairs said on Thursday.

In a statement, the ministry said an export ban implemented on Jan. 1 had been eased for miners that had met a requirement to sell a portion of their output for local power generation after the state utility procured enough coal at power stations to ensure 15 days of operations.

"I request that this is supervised closely so this also becomes a moment for us to improve domestic governance," Luhut Pandjaitan, coordinating minister for Maritime and Investment Affairs, said in the statement.

The 37 vessels included 14 ships whose clearance was announced earlier in the week. It was not immediately known how much coal the vessels carried.

Sending shockwaves through global energy markets, Indonesia set the export ban after state power company, Perusahaan Listrik Negara (PLN), reported critically low coal stocks at power plants that left Indonesia on the brink of widespread power outages.

Indonesian authorities blamed the coal supply crisis on miners failing to meet a so-called Domestic Market Obligation (DMO), requiring them to sell 25% of output to local buyers with a price cap at $70 per tonne for power plants.

The government has been lobbied by coal miners and also some of its biggest buyers including Japan and South Korea to ease the export ban.

There were about 120 vessels either loading or waiting to load off Indonesian's coal ports in Kalimantan on the island of Borneo on Wednesday, according to Refinitiv Eikon data.

The ministry said in the statement on Thursday that mining companies that had met their sales contract with PLN and 100% of their DMO requirements for 2021 would now be allowed to begin exporting.

Miners that had not fulfilled their PLN contracts and DMO would face fines, it said.

Citi in a research note on Jan. 5 estimated around 490 out of 631 coal miners in the country had not yet fulfilled their DMO obligation. These 490 coal miners represent about 35%-40% of Indonesia's total production, it added.

According to minutes of a meeting between miners and the trade ministry earlier this month, 418 miners did not sell any of their coal to local generators last year.

Indonesia's two largest coal groups, PT Bumi Resources and Adaro Energy, as well as state coal miner Bukit Asam, were among companies who said in stock exchange filings they have met DMO requirements.

Bumi Resources director Dileep Srivastava said on Thursday said the company was awaiting formal confirmation from the government but said an easing would be a positive development.

An Adaro spokesperson said its ships were yet to leave port as of Thursday morning. (Reporting by Bernadette Christina and Fransiska Nangoy; Editing by Ed Davies and Richard Pullin)

 

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