The domestic demand of coal is estimated to soar from 62.5 million tons in 2007 to 70.75 million tons in 2008. Consequently, the Government has ruled that a Domestic Market Obligation (DMO) be applied to the industry.
The above was stated in a press release from the Ministry of Energy and Mineral Resources (ESDM) received by this magazine, 27 June 2008. The statement says that the move is in accordance with the stipulations of articles 12 and 13 of the working contract for coal mining, or PKP2B in its Indonesian acronym.
According to the working contract, if the Government falls short to obey the domestic requirement due to a huge increase in the coal demand, contractors are obliged to conform parts or all of their trades to support the domestic needs, based on stipulations and provisions that have been agreed upon, on a condition that it could be so performed without hindering their previous obligations.
The DMO will be applied based on the queries from industry, transportation and electricity sectors. Apart of attempting the move, the Government is also considering to adjust its share of 13.5 percent of the total coal production by the contractors.
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