Government urged to reconsider coal BLU formation

The Indonesian Mining and Energy Forum (IMEF) chairman, Singgih Widagdo, has called on the government to thoroughly review the proposed establishment of a Public Service Agency (BLU) dedicated to managing coal.

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If we look at the goal, it is indeed good, namely to increase and maintain the availability of coal and natural gas for national energy resilience. However, if the BLU is implemented, it needs to be clarified how the division of roles and responsibilities in meeting energy needs will be.

Widagdo stated that while the objective of enhancing and securing the supply of coal and natural gas for national energy resilience is commendable, the specific institutional design and operational framework of the BLU require significant clarification. He emphasized the need for a clear division of roles and responsibilities to ensure effective management of the domestic coal supply and provide certainty for all business stakeholders.

The IMEF chairman pointed to the draft Presidential Regulation (Perpres), which grants the BLU broad authority, including reconciling needs, planning, procurement, and distribution of coal. The BLU would also be empowered to purchase directly from mine owners and enter into long-term contracts. Widagdo stressed that such extensive powers must be accompanied by transparent and measurable mechanisms, particularly in selecting suppliers and determining contract volumes.

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How the BLU will provide justice for all business actors still leaves questions. It should not be that the BLU merely conducts transactions with certain companies.

He expressed concerns about fairness for all business actors, questioning whether the BLU might inadvertently favor specific companies. The complexity of Indonesia's coal industry, with nearly 800 mining permits, diverse production capacities, varying mine locations, and a wide range of coal quality, presents a significant challenge. Widagdo suggested that the BLU could face considerable operational hurdles if it were to become the sole domestic coal buyer and reseller to the power sector.

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With that condition, I see the BLU will face complexity if it has to become the sole coal buyer in the country and resell it to the general electricity sector.