Reva Sasistya

Energy Advisory Council Mulls Coal-Export Ban

The National Energy Council, which advises the House of Representatives and the president on energy issues, has begun to debate a proposal to ban exports of coal, perhaps as soon as 2015.

Those on the council, known as DEN, who support the proposal argue that Indonesia, now Asia’s largest exporter of coal, will be able to absorb its production by that date. They also point to the need for energy security and the country’s diminishing coal reserves.

However, one industry representative argued that such a ban would hurt investment in the sector, and that domestic buyers would be unable to absorb the additional supply without aggressive expansion of the country’s coal-fired electricity-generating capacity.

Herman Darnel Ibrahim, a council member representing industry, said the ban was needed because the country’s remaining coal reserves were now estimated to be sufficient for only 20 years.

“Energy security is the main factor to consider,” Herman said. “The role of energy resources should change from that of generating state revenue to supporting the country’s development.”

Council member Rinaldi Dalimi, who represents academia, said banning exports would benefit the country because the price of coal was expected to increase significantly. “We do not want to face a domestic shortage in the future just because we set a priority on exports,” Rinaldi said.

Bob Kamandanu, chairman of the Indonesian Coal Producers Association (APBI), warned that such a ban would drive away international investors.

“With the current domestic market conditions, the proposal would only negatively impact the investment,” he said.

“Should the government aim to scrap exports, there should be at least 70,000 megawatts of coal-fired plants to absorb the production. We won’t mind ending exports as long as there are buyers for our production.”

Energy Minister Darwin Zahedy Saleh, executive chairman of the council, said the ban would probably not be implemented as long as the country had a stable, consistent supply of coal.

Total national production of coal is expected to reach 280 million tons this year, with 75 million tons allocated to the domestic market.

Last year, the coal output was 254 million tons. About 198 million tons of the production was exported, mainly to buyers in Japan, China, India, Australia and Africa.

Coal exports last year were worth a total of $14.85 billion, said Bambang Setiawan, director general of coal, minerals and geothermal energy at the Energy Ministry.

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