Indonesia's revenue needs override coal curbs as oil take drops

Indonesia's revenue needs override coal curbs as oil take drops

Indonesia will miss coal production targets as the government needs to lean
on revenue from the fuel to make up shortfalls from its take from oil and
gas output, ensuring the country keeps its top coal exporter status,
officials said.

Southeast Asia's largest economy will need to boost coal shipments as
revenues from the sector are critical for the government. This will
undermine planned coal production curbs seen as crucial to Indonesia's
policy of using the fuel as the backbone of its electric power development
plans.

Indonesia is targeting a 20 percent increase in non-tax revenues from the
mining sector, which includes coal, in 2017 to 32.48 trillion rupiah ($2.44
billion), up from 27.15 trillion rupiah in 2016, to replace declining oil
returns, according to Agung Pribadi, director of coal business at the mining
ministry.

This target will make it very difficult for the mining ministry to limit
output, he said.

"Oil (revenues) have declined, (so) the government needs additional revenues
and they also hope for an increase from coal," Pribadi said on the sidelines
of a conference last week.

Non-tax revenues from oil and gas roughly halved in 2016 to 44 trillion
rupiah ($3.31 billion) from 78.2 trillion rupiah in 2015. That same year,
mining revenues were 29.3 trillion rupiah.

The coal sector contributes about 80 percent of the mining non-tax revenues.

Growth has slowed in resource-rich Indonesia as exports, investment and
citizen's purchasing power have all declined following a plunge in commodity
prices.
Indonesia's coal production is expected to climb 5 percent in 2017 and 2018
from an estimated 440 million tonnes in 2016, as miners ramp up output due
to improved prices.

Those gains are more than the targets of 413 million tonnes for 2017 and 406
million tonnes for 2018 set by the National Development Planning Agency. The
agency has set a production cap of 400 million tonnes from 2019 onward in an
effort to secure domestic supply.

Indonesia's coal consumption is expected to increase to 101 million tonnes
this year from 90.6 million tonnes in 2016, and the government is concerned
that Southeast Asia's largest economy could exhaust reserves unless output
controls are enforced.

Indonesia's ambitious 35 gigawatt power development program, of which around
40 percent is now under construction, is expected to roughly double the
country's demand for coal used for power by 2024 to 151 million tonnes from
73.2 million tonnes in 2016, according to state power utility Perusahaan
Listrik Negara (PLN).

"Coal . will be part of the backbone of (Indonesia's) energy sovereignty,"
said Satry Nugraha, a staff expert to the energy and natural resources
minister, at the conference. "On the other hand this country still needs
non-tax revenue from the coal industry."

Among other issues complicating efforts to curb coal output, enforcing
production and export controls on miners holding permits from provincial
governments is proving difficult, Pribadi said.

"These businessmen have exploration permits, and at the same time have
rights to produce," said Pribadi. "Once I've completed exploration and I
want to increase production no one can stop me, right?"

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Link to Original Article:
http://www.hellenicshippingnews.com/indonesias-revenue-needs-override-coal-c
urbs-as-oil-take-drops/

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com