Coal War

After a marathon meeting, on the evening of January 10, 2022, Coordinating Minister for Maritime Affairs and Investment Luhut Pandjaitan announced that the government revoked the coal export ban that had been brought in on January 1. This decision would be effective from January 12.

This rapid decision was anticipated. It was rather surprising that President Joko Widodo showed courage and resolve in banning the exports of coal in the interest of the people, namely the threat to electricity supplies because the coal stocks at PLN power plants were running low as a result of businesses preferring to sell coal overseas. Naturally businesspeople were happier exporting coal because the price last year surpassed US$215 per ton, while the price of coal sold to PLN, although obligatory, is set at US$70.

The uproar over the export ban reminds us of a similar situation last August when a number of coal-fired steam power plants were threatened with shutdown because of a shortage of coal supply. The directorate-general of minerals and coal banned 34 mining companies from exporting their products if they failed to meet their obligation to supply coal for domestic interests, known as the domestic market obligation (DMO)

The difference between the policies in August 2021 and January 2022 is that this time the ban affected all coal companies. It was also imposed suddenly. Decided on December 31, 2021, the month-long export ban came into force the very next day. The Indonesian Coal Mining Association (APBI) loudly protested the policy.

Why were there tougher sanctions for the coal industry this time? Why was the ban imposed suddenly? Is it only coal companies that are to blame for the problem?

Coal-fired steam power plants owned by state electricity company PLN and private power generators are yet again facing a coal supply crisis. PLN has even scheduled alternating shutdowns for power plants in Java, Sumatra and Sulawesi from January 5 to 10 if it fails to obtain additional stocks of coal.

Reports from PLN show the crisis in our electricity system at the start of 2022. Minutes from a number of meetings also portray the heated nature of discussions between the government and the industry. From these, it is apparent that there are hundreds of mining companies that did not fulfill their DMOs last year.

It turns out that the export ban was not only triggered by poor compliance by businesspeople. There have long been signs of a crisis of coal stocks at government and private power plants. There are many shortcomings with the PLN supply system that increase the risk of coal stock shortage problems. Signs of internal problems in PLN became even more apparent after the state-owned enterprises minister fired the company’s director of primary energy.

This disarray has a happy ending. The government began to listen once more to the voices from businesses and revoked the export ban. This Tempo cover story provides details of how the coal crisis occurred again and on the facts behind the government’s surprising decision to ban coal export.

Enjoy the magazine!

Agoeng Wijaya

Executive Editor

Cover Stories:

Breaking up the New Year’s Party

What triggers the coal export ban? There is no planning behind the management of coal.

The Causes of the Coal Crisis

What are the real causes of the crisis in coal supplies at PLN power plants? There are two. What are they?

An Alternative to Replace the DMO

The domestic market obligation, which is designed to meet requirements for coal at a set price of US$70 per ton clearly contains moral hazard. What is the alternative?

Why the Ban on Coal Exports was Dangerous

Exports of coal have saved the Indonesian economy. If they are banned, it could lead to economic upheaval. This should make us more aware of the need to switch to renewable energy soon.

ARCHIVES

A More Tempting Price for Coal

In the middle of the climate crisis, why is coal once again the prima donna? The gas crisis has led to coal bringing in huge profits.

The 2020 Export Ban

This time the coal export ban was more rational because it applied to all companies. It could mean the end of coal-fired steam power plants.