January 15, 2010 / 5:53 AM / 9 years ago

FACTBOX-Indonesia imposes coal, minerals domestic sales rule

JAKARTA, Jan 15 (Reuters) - Indonesia has devised a complex formula for miners to meet domestic needs that coal industry officials fear could crimp exports in the coming years.

The new decree, which would come into effect this year, flows from a mining and coal law passed in December 2008. It aims to squeeze more revenue from the sector and assure supplies of minerals such as coal for the home market where demand is expected to surge as new power projects are completed. [ID:nJAK429603]

At stake for the coal industry in the decree seen by Reuters is whether the world’s largest thermal coal exporting country will set aside more coal for domestic use and curtail exports to Asian nations like energy-hungry China and India.

Below are details of the ministerial decree.


* Coal and mineral miners must prioritise meeting domestic demand.

* A minimum percentage of coal or minerals will be sold locally by a calculation of total domestic consumption divided by the production of coal or minerals each year in a process overseen by the energy ministry.


* Coal and mineral miners must submit year-ahead production forecasts and costs to the energy ministry that include domestic sale figures.

* New permits for domestic sales and transport are required along with domestic sales reports every quarter in order to confirm compliance, or be allowed to sell output above quota.


* Consumers must detail consumption plans and cannot export coal or minerals bought under the domestic sales requirement.


* Sanctions can be applied for any breaches of the decree if the energy minister, state or regional governors find violations.

* Quotas for consumers or suppliers can be reduced by as much as 50 percent for failure to meet the terms of the decree.


* Any domestic sales percentage agreement in force prior to imposition of the new decree remains in effect. (Reporting by Fitri Wulandari; Editing by Choonsik Yoo and Ed Lane)

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