Commodity Prices Lift Non-Tax Revenues in Coal and Mineral Subsector, Says Director General

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 383.Pers/04/SJI/2021

Date: 27 October 2021

Commodity Prices Lift Non-Tax Revenues in Coal and Mineral Subsector, Says Director General

The spike in mining commodity prices in recent months has impacted positively on the realization of state revenues. Until Q3 2021, the realization of non-tax state revenues (PNBP) in the mining subsector hit Rp49.67 trillion, or 127% of the government's 2021 target of Rp39.1 trillion.

"Of the Rp39.1 trillion target in 2021, to date the PNBP has reached Rp49.67 trillion. There are still three months left. This is the best achievement," said Director General of Mineral and Coal, Ridwan Djamaludin, during a press conference titled "Performance in Q3 2021 and Strategic Issues of the Mineral and Coal Subsector" held on Wednesday (27/10).

Ridwan went on to say that the positive realization was due to commodity prices and the implementation of appropriate policies by the government. "This (realization) is driven by good commodity prices and the government's efforts to adopt policies that enable business entities to act faster and more agilely," he said.

Another factor that has supported the high realization of PNBP is the level of domestic coal production. For nine months, domestic coal production reached 450 million tonnes or 72% of the 2021 production target of 625 million tonnes. Of this amount, 98.3 million tonnes or 71.5% of the target of 137.5 tonnes were absorbed by the domestic market.

According to the Director of Coal Business Fostering Sujatmiko, most of the domestic supply has been used to meet the needs of power plants. "How is the guarantee of domestic supply? Electricity generation will use 113 million tonnes. We guarantee that domestic coal needs, for both electricity generation and industry, will be met," said Sujatmiko on the same occasion.

Sujatmiko guaranteed that supply would be available despite the potential for weather disturbances at the end of the year. "As of September, production had reached 450 million tonnes, while the target at the end of the year is 625 million tonnes. We're just a little short due to weather factors," said Sujatmiko.

The government encourages business actors to continue to increase coal production. "We still pay attention to the target. We may miss the target a bit but that's because of the weather, not because of readiness in the field," Sujatmiko added.

Industrial DMO Price

To meet the needs of the domestic industry, the government is formulating the price of Domestic Market Obligation (DMO). "We will finalize the coal DMO price for non-electricity industries such as the cement industry. We have had discussions with the Ministry of Industry and the Indonesian Coal Mining Association (APBI-ICMA) about the DMO price formula and coal quality," said Sujatmiko.

Sujatmiko added that the policy of coal DMO price for the domestic industry would consider sustainable operations of coal producers and the country's fiscal space. The Ministry of EMR plans to make coal DMO price for industry more flexible.

The Ministry of EMR sets the DMO volume for domestic power plants at 25 percent of the total national coal production, while the price is set at USD 70 per tonne. The price does not follow the movement of coal prices in the market.

The government emphasizes that business actors who do not meet the DMO for power generation and industry will be subject to sanctions. "They will be prohibited from exporting and will face fines according to the differences in price and the shortage of supply," Sujatmiko concluded. (IY)

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