The Indonesian Coal Mining Association (APBI-ICMA) assesses that the management of coal procurement by PLN has contributed to the commodity supply crisis. PLN is encouraged to improve procurement governance to secure supply. This was stated by the Executive Director of APBI-ICMA, Hendra Sinadia in front of Commission VI DPR RI, Wednesday (19/1). This BUMN partner has begun to explore how the governance in the national coal industry actually causes a supply crisis for PLN's needs which has occurred recently.

 According to him, the root of the problem that has become quite a spotlight in the coal supply crisis in Indonesia is related to the polarization of management from PLN itself. Because, as is known, so far the supply of coal for PLN needs, 20-30% of the procurement is not directly from coal producers, but through traders or their subsidiary, PLN Batu Bara. Then, 60% of the procurement is through PLN's own coal division, and 10% from others.

Traders of PLN or PLN Batu Bara also sometimes buy coal supplies to several small companies to blend different types of coal according to PLN's needs.

Procurement through this trader, said Hendra, makes it quite difficult for the government to emphasize the DMO rules, because traders are not bound by government regulations.

“From PLN Batu Bara, if you buy through a trader, it's a bit difficult for the government to force the DMO because it doesn't exist. That's what causes difficulties, (Ditjen.red) Minerba himself wondered. Because, traders stand alone. Now, what is done at a critical time like that becomes a burden for companies that are already in accordance with their DMO," he explained.

He also considered that PLN should improve their internal supply of coal to secure coal stocks. PLN is also encouraged to deal directly with producers or miners. Thus, the Domestic Market Obligation (DMO) policy can be implemented by coal mining companies.

Sufficient Supply

He added, at a macro level, the national coal resources and total reserves are quite guaranteed. The amount is around 38.8 billion tons, based on data from the Ministry of Energy and Mineral Resources.

“If we use the annual production rate of around 613 million tons which we divide from 38 billion tons, in theory we still have a coal age of more than 60 years. But of course it also depends on Indonesia's climate change," he said.

He explained that 80% of the realization of the fulfillment of coal needs in Indonesia was used for electricity needs such as PLN and IPP. The rest, which is around 20% of the fulfillment of coal needs, is destined for non-electrical industries such as cement, paper, fertilizer, textile and so on.

However, in reality, many companies are unable to supply coal to PLTU. According to him, from the total production of 613 million tons produced annually, there are only about 240 million tons of coal production whose quality, judging from the calories and sulfur content, meets the specifications or is in accordance with the needs of PLN and IPP. Of that amount, the realization of absorption by PLN is around 112 million tons.

“As we know, a PLTU is adapted to a certain quality of coal. So the Cilacap PLTU, for example, has so many calories, so much ash content, so much sulfur content. Of the 240 million tons of coal production in 2021, which is in accordance with PLN's needs, only 112 million tons have been absorbed. So only about 47%," he explained.

In addition, in his presentation, Hendra also mapped several incidents of coal supply shortages that occurred in recent times. He said scarcity often occurs when coal commodity prices are in a high condition. Reflecting on the problem, he also appealed to the government to arrange the right steps.

“First, we must ask the government how to think of an appropriate scheme. Because price disparity is one of the factors that makes this condition possible. So this price is one of the important points of how the scheme that will be taken later at least pays attention to price disparities," he explained.