Dummy #1

Special Agencies Needed to Supervise Local Coal Supply
Putri Prameshwari

Indonesian coal producer said Monday there has to be a special agency dedicated to manage in kind royalty payment of the coal domestic market obligation (DMO) in the country.

Director and Corporate Secretary of PT Adaro Energy Tbk Andre Mamuaya implied that the company is willing to contribute to the DMO in the form of coal commodity, better known as in-kind royalty.

“If the government applies in-kind royalty, a special agency must be formed in order to manage the logistic aspects,” Mamuaya told Jakarta Globe over the phone.
Mamuaya explained that Adaro, currently the second largest coal producer in Indonesia, is willing to allocate 30 percent of its annual output for domestic market. The special agency should be able to supervise more than a hundred coal miners in the country who are likely to contribute their in-kind royalty to the DMO scheme.

Coal Contract of Work (PKP2B) holders are obliged to sell parts of their products to the domestic market. Taufik Sastrawinata, Secretary General of Indonesian Coal Society, said Tuesday that the market price might follow the lowest export price. However, the said price is yet to be confirmed.

“Considering the fluctuating global coal price, the government has to be extra careful on determining the local price. An independent team should be formed and discuss about the matter,” he explained via telephone conversation.

The team, Sastrawinata elaborated, should consist of stakeholders from the Energy and Mineral Resources Ministry, Finance Ministry, State-Owned Power Company (PT. PLN), and other related parties.

Sastrawinata assured that coal producers would not suffer from damage as the government might only require ten percent of their output for DMO allocation.
Indonesian government has been considering applying domestic market obligation in order to secure domestic coal supply for the upcoming years. Local demand for coal is predicted to increase in the next two years, as companies begin to switch their energy source to coal because of the rising oil and gas price.

PT. PLN has also started its 10,000 MW project, which will provide more energy by the end of 2009 through several new power plants. Sastrawinata said the need of coal supply would more than double to 72 million tons per year due to the development plan.

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I had no idea there could be so many mistakes from that article. Sigh.