Energy minister flags tighter supply of medium-grade coal for PLN

By Cepi Setiadi

Minister of Energy and Mineral Resources Bahlil Lahadalia said supplies of medium-calorific coal used by state utility PT PLN (Persero) are becoming increasingly scarce, posing challenges to efforts to secure fuel for the country's coal-fired power plants.

Speaking at a hearing with Commission XII of the House of Representatives on Monday, Bahlil said PLN's annual coal requirement is around 154 million metric tons. To meet that demand, the government has assigned coal miners to supply about 190 million tons under its domestic market obligation (DMO) scheme.

"Of the 190 million tons assigned, around 150 million to 160 million tons have been confirmed, while 134 million tons have already been contracted," Bahlil said.

The minister said PLN still needs to secure around 20 million tons of coal to fully meet its annual requirement.

His remarks come after power outages in parts of West Java last week sparked speculation that fuel supply constraints may have contributed to disruptions at power plants, amid a government plan to reduce national coal production to around 600 million tons this year from a record 790 million tons in 2025.

Bahlil, however, last week dismissed suggestions that the outages were caused by coal shortages, saying domestic coal supplies for power generation remained adequate.

"Claims that coal is scarce are not true because our domestic supply allocation has already reached 170 million tons," he told reporters on Thursday, adding that the outages were caused by technical problems at several generating units.

On Monday, Bahlil said the challenge facing PLN was not the overall availability of coal but the declining supply of medium-calorific coal required by many of the utility's power plants.

"PLN requires medium-grade coal with relatively good calorific value. However, such coal is becoming increasingly scarce," he said.

He added that pricing has also become an issue for coal suppliers. Under the DMO scheme, coal sold to PLN is capped at $70 per ton, well below international market prices, while stripping ratios at some mines have increased to between 10 and 12.

The higher mining costs have reduced the economic incentive for producers to allocate coal to the domestic market, Bahlil said.

"Under those conditions, supplying coal to PLN has become increasingly challenging from an economic perspective for mining companies. That is the problem we are facing," he said.

To address the issue, the Energy Ministry is evaluating measures to provide greater flexibility in coal allocation and ensure PLN's fuel requirements are met.

Bahlil also said President Prabowo Subianto had instructed the government to strengthen oversight of primary energy procurement to prevent recurring supply issues at the state utility.

The government has established a monitoring team comprising representatives from PLN, the Energy Ministry's Inspectorate General, the Directorate General of Minerals and Coal, and the Financial and Development Supervisory Agency (BPKP).

"The most important thing is to provide the best service for the country and ensure the public does not face problems resulting from disruptions to electricity supply," Bahlil said.

Editing by Reiner Simanjuntak