Disappointments Over Indonesia Coal Export Ban

TheIndonesia.co - Several figures have expressed their disappointment over the government’s decision to ban the export of coal during January 2022.

Ministry of Energy and Mineral Resources said the step is an effort to ensure the availability of coal supply for power plants in Indonesia.

However, Chamber of Commerce and Industry (Kadin) thought the governments should’ve discussed the plan first with industry players prior to making and announcing the ban. As reported by Antara, Kadin said industry players shouldn’t be sidelined as their role is equally massive in national economy.

“The government is not alone in the effort to recover national economy – it should be done together with industry players. [They] play important role in pandemic, so we expect all policies that will impact businesses and national economy, like coal export ban, to be collectively discussed,” Kadin chairman Arsjad Rasjid said in a statement on Saturday, January 1.

He further asked for the policy to be reevaluated considering that many national coal companies still have contract with foreign companies. In addition, there’s concern that the policy will be seen as an inconsistency on Indonesia’s part related to business regulations.

“Indonesia’s reputation as world’s coal suppliers will decline. Furthermore, our efforts to invite investments and to present ourselves as investor-friendly country with good investment climate and legal protection will decline. Investors’ interest in mining, mineral, and coal will disappear due to lack of certainty,” Rasjid added.

US$3 Billion Loss

Chairman of the House of Representative’s Budget Committee (Banggar) Said Abdullah also criticized the ban, saying that Indonesia will lose the opportunity to get more foreign exchange reserves through the export.

“As a result of this export ban, we’re no longer able to enjoy foreign exchange earnings from coal export which can potentially reach US$3 billion per month,” Abdullah said on Tuesday.

Similarly, he also reminded that national coal exporters now face the risk of getting penalized as shipment stops.

“Instead of enjoying increase in coal production, they’re slapped with fines by their foreign buyers.”

Previously, Ministry of Energy and Mineral Resources announced that it “temporarily bans” coal export from January 1 to 31, 2022, as it looks to fulfill national supply for power plants.

The Ministry deemed the step urgent as millions of customers in Indonesia will be at the risk of experiencing outage.

“If the ban isn't enforced, almost 20 power plants with a power of about 10,850 megawatt will be out. This will potentially disturb the stability of national economy. When supplies are met, business can be back to normal, everyone can export. We'll evaluate it after 5 January 2022," director general of mineral and coal at the Ministry, Ridwan Jamaludin, said in a statement on Saturday.

Prior to making the decision, he said the government had repeatedly warned coal miners to fulfill their coal supply commitment to state-owned power company PLN, but to no avail.

"Of the 5.1 million metric tons (MT) assigned by the government, as of January 1, 2022, only 35,000 MT or less than 1% is met. This amount cannot meet the demands of all power plants," Jamaludin explained.

Lastly, he also asked coal companies to meet the Domestic Market Obligation (DMO) as their compliance will help the country maintain healthy investment climate and national economy at large.