Coal Production Cuts Thin Power Plant Stocks; Is National Electricity Supply Safe?

JAKARTA – Coal stocks at several thermal power plants (PLTU) have been reported as dwindling, sparking concerns about the reliability of Indonesia’s national electricity supply. Industry players cite reserves in the field as falling short of ideal levels, whilst the government asserts that primary energy requirements remain adequate.

This situation is significant as nearly half of the nation’s electricity supply stems from private power generators. Should the supply chain be disrupted, the consequences could extend throughout the national electrical system.

“Currently, some generators hold stocks of less than 10 days, whilst others have only several days’ worth,” said Joseph Pangalila, Supervisory Board member of the Association of Indonesian Private Power Producers (APLSI), in an interview with Kompas.com on Thursday (26 February 2026).

“Only a handful of generators have reached 25 days of reserves.”

According to Pangalila, independent power producers (IPPs) account for nearly 50 per cent of the nation’s electricity supply. Given this significant contribution, a coal supply crisis is considered to pose substantial risk to national electricity security.

He contended that the low pricing of the domestic market obligation (DMO) is a principal reason why coal suppliers find the electricity sector less attractive.

The DMO price for the electricity sector was set at 70 US dollars per tonne for coal with a calorific value of 6,322 kcal/kg GAR, equivalent to approximately Rp 1.085 million per tonne (at an exchange rate of Rp 15,500 per US dollar). By comparison, the DMO price for the cement industry is 90 US dollars per tonne, or approximately Rp 1.395 million per tonne, whilst the smelter industry follows market prices.

“This electricity DMO price has remained unchanged since 2018, yet coal production costs have continued to rise,” Pangalila noted.

“It is therefore unsurprising that suppliers show little interest in supplying coal to the electricity sector. Some have even incurred losses from selling to power plants.”

Separately, the government plans to reduce national coal production to 600 million tonnes in 2026, down from 790 million tonnes realised in 2025.

“If generator stocks decrease, it could reduce the reliability of electricity supply and make the system extremely vulnerable,” Pangalila warned.

“If a generator suddenly breaks down or poor weather disrupts coal deliveries for several days, an electricity shortage is possible.”

According to him, policy-wise, the supply should be adequate due to the DMO obligation, whereby 30 per cent of national coal production is allocated for domestic needs, including PLTU.

“Therefore, supply requirements should theoretically be sufficient,” he stated.

“Should reserves drop below 20 days, the procurement system would need review based on existing working capital budgets, and delays must be avoided.”

Pangalila emphasised that the government does not want disruptions to primary energy supply to trigger electricity system problems.

“We cannot allow domestic power generators’ primary energy supply to be disrupted,” he said.

“Primary energy is not limited to coal; it also includes LNG availability for generators and gas supplied through pipelines.”