Entrepreneurs Must Prioritise Coal for Domestic Market
The Ministry of Energy and Mineral Resources (ESDM) has confirmed that not all coal mining companies are affected by the production quota cuts outlined in the 2026 Work Plan and Budget (RKAB).
The government has granted exemptions to companies holding first-generation Coal Mining Work Agreements (PKP2B), including subsidiaries of PT Bumi Resources Tbk and PT Adaro Energy Indonesia Tbk. Additionally, state-owned enterprises holding Mining Business Licences (IUP) are not included in the list of companies facing quota reductions.
Deputy Minister of ESDM Yuliot Tanjung explained that companies not subject to production cuts have been prioritised to meet domestic energy requirements. He stated that the production quotas established in the 2026 RKAB must be optimised, particularly to ensure domestic supply.
“Those that are not being cut means they are prioritised for providing domestic energy,” Yuliot said when met at the ESDM Ministry on Friday (27 February 2026).
He clarified that for now, the government will review the quotas set for 2026 and encourage optimisation of production processes. If there is an increase in domestic demand and supported by favourable price conditions, the management of the mining sector will continue to prioritise principles of sustainable mining governance.
“If there is an increase in domestic demand, including under favourable price conditions, our principle is sustainable mining management, including the beneficial use of that energy,” he said.
Previously, the Director-General of Minerals and Coal (Minerba) at the ESDM Ministry, Tri Winarno, explained the rationale behind this special treatment. The government considers that the contribution to state revenues from these company groups is significant, both in terms of royalties and profit sharing, thereby maintaining production levels.
“I already explained yesterday that first-generation PKP2B holders and state-owned enterprise IUP holders are not affected by the RKAB cuts. Why first-generation PKP2B? Because they pay 19 per cent royalties and 10 per cent net profit to the state: 4 per cent to the central government and 6 per cent to regional governments,” Tri said when met in Jakarta on Thursday (12 February 2026).
In parallel, several first-generation PKP2B holders are also responsible for fulfilling domestic market supply obligations (DMO). The government is targeting that coal supplies from these company groups can be accelerated at 30 per cent to secure national electricity stocks.
“We are asking some first-generation PKP2B holders to allocate 30 per cent,” he added.