Jakarta. Indonesia's National Energy Council (DEN) has urged the government to review the country's coal domestic market obligation (DMO) policy after recent power outages exposed vulnerabilities in electricity supplies despite the nation being the world's largest coal exporter.

M. Fadhil Hasan, a member of the National Energy Council, said disruptions in coal deliveries and technical problems at several power plants contributed to recent rolling blackouts, although repairs have been completed and fuel supplies have begun to normalize.

"The main issue lies in coal supply and the DMO mechanism," Fadhil said on Thursday. "We need a comprehensive evaluation to prevent similar disruptions from happening again."

The blackouts have raised questions about the reliability of Indonesia's electricity supply chain as state utility PLN scrambles to secure additional medium-grade coal used by many of its coal-fired power plants.

PLN President Director Darmawan Prasodjo said the utility is accelerating procurement and contract signings with coal suppliers assigned by the government. Authorities have also established a special task force to secure medium-rank coal with a calorific value of around 5,200 kcal per kilogram, a grade widely used by PLN power stations.

PLN requires about 154 million metric tons of coal annually but has secured contracts for only around 134 million tons, leaving a supply gap of approximately 20 million tons, according to Energy Minister Bahlil Lahadalia.

Fadhil said coal producers have been caught between rising production costs and the government's DMO policy, which requires miners to supply domestic users at regulated prices. Coal sold to PLN under the scheme is capped at $70 per metric ton, significantly below international thermal coal prices of around $144 per ton and Indonesia's benchmark coal price of $122 per ton in June.

"If miners fulfill the DMO without price adjustments, it could hurt their own business sustainability," Fadhil said, adding that PLN may have been slow to anticipate changing market conditions.

The government is reportedly studying a higher DMO price cap of more than $80 per ton to better reflect production costs.

Indonesia has set its 2026 coal DMO requirement at 190 million metric tons, above PLN's annual demand, while the government is also considering reducing national coal production to around 600 million tons next year from a record 790 million tons in 2025.

Blackouts Disrupt Factory Operations
The recent outages have also disrupted manufacturing operations. Benny Soetrisno, a senior adviser at the Indonesian Employers Association (Apindo), said many factories rely entirely on PLN electricity and were unprepared for unexpected power cuts.

"Manufacturing industries depend on PLN power. If blackouts occur without warning, companies have no time to prepare," he said.

Food and beverage producers, seafood processors and textile manufacturers were among the hardest-hit industries. Seafood processors depend heavily on refrigeration systems, while food producers face risks of spoilage during production interruptions.

Garment and textile factories also suffer immediate production stoppages during outages, even as labor costs continue to accrue.

Business groups said the economic impact could have been reduced if companies had received advance notice, but several recent outages occurred without warning, leaving manufacturers unable to take preventive measures.

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