CSIS: Coal Production Drop Pressures Electricity Supply and National Exports

Power outages in Indonesia are not solely due to technical issues but are significantly linked to a decrease in coal production, which affects the national energy supply, according to Yose Rizal Damuri, Executive Director of the Centre for Strategic and International Studies (CSIS).

Damuri explained that the power disruptions stem from a limited supply of coal for power plants, including those operated by PT PLN and independent power producers (IPPs). "Coal production last year, according to the Ministry of Energy and Mineral Resources, reached 790 million tons, a decrease from 836 million tons in 2024," he stated in a written release on Tuesday.

Concurrently, domestic coal demand continues to rise, with a substantial portion met through the Domestic Market Obligation (DMO) scheme, particularly for power generation. Despite the overall production drop, the realization of DMO actually increased from 232 million tons in 2024 to 246 million tons last year. "As a result, exports have seen a decline since early 2025 and continue to this day," Damuri noted.

The trend of declining production is expected to persist due to the restructuring process under the Work Plan and Budget (RKAB) set by the Ministry of Energy and Mineral Resources. The RKAB has set the coal production target at approximately 600 million tons, a decrease of about 24 percent compared to last year's realization. Meanwhile, the DMO target has only seen a slight increase to 248 million tons.

Damuri believes this policy narrows the flexibility for coal producers. He mentioned that several coal producers have halted operations because they have not yet received RKAB approval. Although the government has offered relaxations to maintain production, the uncertainty surrounding the coal business outlook remains high. "This is certainly a consideration for producers in continuing their activities," he added.