Worried that possible domestic shortages might cause blackouts, the Indonesian government banned coal export for 2022. Businesses complain that will have huge costs.
Jakarta (AsiaNews) – The Indonesian Chamber of Commerce and Industry (KADIN[*]) and the Indonesia Coal Mining Association (APBI[†]) have criticised the government for its recent decision to ban coal exports starting on 1 January 2022 for a year out of concern for domestic supplies.
Ridwan Djamaluddin, head of the Directorate General of Mineral and Coal at the Ministry of Energy and Mineral Resources, said that a rise in demand for electricity could lead to widespread blackouts across the country, leaving at least 10 million people in the dark.
Indonesia is one of the largest coal exporters in the world with about 400 million tonnes exported in 2020.
The ministry explained that the new ban is part of Indonesian domestic market obligation, whereby coal producers must supply 25 per cent of their annual production to Persero, PT Perusahaan Listrik Negara, (State Electricity Company), for a top price of US$ 70 per tonne, which is well below the market price.
According to coal producers and exporters, the government’s decision is disproportionate to the problem. Both urge the ministry to reconsider its policy.
For KADIN president Arsjad Rasjid, without the business sector, a recovery of the country’s economy will not be possible. “The coal export ban should have been first discussed (with us) before it was adopted,” he said. Businesses will discuss the issue in coming days, he added.
APBI chief Pandu Sjahrir also expressed concerns about the new policy, calling on the authorities to lift the ban. “This regulation will seriously impact the coal mining industry,” he said. With production reduced by 38-40 million tonnes, “Indonesia will lose at least US$ 3 billion a month.”
Shipping companies will also be impacted, unless the policy is changed. "Indonesian coal exporters will be charged between US$ 420 and $ 440 thousand per day per ship in demurrage fees[‡].”
[*] Kamar Dagang dan Industri Indonesia
[†] Asosiasi Pertambangan Batubara Indonesia
[‡] Charges that charterers pay to ship owners for delayed operations of loading/unloading.