Sumatra Blackout: Observer Says Energy Ministry Must Take Responsibility

The Centre of Energy and Resources Institute (CERI) has spoken out regarding the alleged coal corruption scandal that resulted in a blackout in Sumatra and Bali. According to the institute, the blackout stems from negligence by the Ministry of Energy and Mineral Resources (ESDM) in managing the fulfilment of coal supplies. CERI suspects that the coal supply shortage occurred because many coal mining companies failed to meet their Domestic Market Obligation (DMO) requirements. However, these companies were still able to continue production and export abroad, when this should have been prevented using the regulatory instruments available to the Ministry of ESDM. “The Ministry of ESDM’s Directorate General of Minerals and Coal should be held responsible when there are violations,” said CERI Executive Director Yusri Usman in a statement. “The Ministry of ESDM should have been able to check that companies were not fulfilling their DMO obligations. They have Simbara (Mineral and Coal Information System) with real-time information. Every miner must input data into Simbara regarding how much they produce, how much royalty is paid, DMO obligations, and so on,” Yusri stated. CERI expressed astonishment that mining companies could still export despite not fulfilling their DMO. “If a company violates the rules, they should automatically not receive an export permit. No miner can export without an export recommendation from the Directorate General of Minerals and Coal to the Directorate General of Foreign Trade,” Yusri continued. CERI also highlighted the blunt nature of the penalties imposed by the Ministry of ESDM on companies that do not meet their DMO. “If they fulfil the DMO, the production cost for the mining company to deliver to the power plant is around 45 dollars. If they do not fulfil the DMO, the fine is 5 dollars per tonne. Meanwhile, the price on the international market is around 68 dollars per tonne. So if a mining company does not fulfil the DMO because it is exporting, it still makes a profit of 17 to 18 dollars per tonne,” he said.