Tenggara Strategics: Power Outages Highlight Critical Need for RKAB and Coal Supply Synchronisation

Tenggara Strategics has stated that the power outages affecting several regions in Java underscore the critical importance of synchronising mining sector policies with the needs of the electricity sector. In its latest analysis, the think tank assessed that the disruption in coal supply, a contributing factor to the power plant operational issues, cannot be separated from the dynamics of national coal production, the implementation of the Domestic Market Obligation (DMO), and the approval mechanism for Work Plans and Budgets (RKAB). According to Tenggara Strategics, the coal supply disruption that contributed to the blackouts cannot be viewed as an isolated problem. This limitation is part of a broader challenge encompassing national coal production dynamics, DMO implementation, changes to the RKAB approval mechanism, and the system’s ability to ensure power plant needs are met amidst changing market conditions. “This supply scarcity is merely a symptom of the wider challenges facing Indonesia’s electricity sector,” Tenggara Strategics wrote in its report. One aspect that received attention is the change in the RKAB validity period from three years to one year. In its analysis, Tenggara noted that many mining companies had not yet obtained approval for their new RKABs by late May or early June. Consequently, several producers were forced to halt operations in April and May because they did not have a valid RKAB. This condition impacted coal shipments, rendering some supply contracts ineffective. Citing industry sources, Tenggara Strategics mentioned that the coal supply disruption to PLN, which contributed to the outages in parts of Java, was partly influenced by delays in RKAB approvals following the government’s licensing policy changes. The analysis further stated that without an approved RKAB, coal producers cannot continue operations or enter into supply contracts with PLN. Tenggara also noted a reduction in production levels in several approved RKABs. This situation is seen as further limiting the ability of some producers to meet domestic market needs amidst high demand from the electricity sector. The analysis highlighted a paradox in national energy governance. Indonesia remains one of the world’s largest coal producers, with a production target of 600 million tonnes per year. Meanwhile, the coal requirement for PLN and independent power producers reaches approximately 180–190 million tonnes per year. Yet, at the same time, the supply for domestic needs, including the electricity sector, remains vulnerable when production or distribution obstacles arise. With the electricity sector’s needs accounting for only about a third of national production, Tenggara concluded that the issue is not one of coal availability, but rather the ability to ensure supply is available on time and meets the specifications required by power plants.