Jakarta (Indonesia Window) – The realization of Indonesia’s Domestic Market Obligation (DMO) for coal in 2020 reached 132 million tons of the total production of 558 million tons.

The government continues to promote the use of coal for domestic needs, one of which is by processing coal into Dimethyl Ether (DME) as an energy alternative to substitute LPG (Liquefied Petroleum Gas).

For 2021, the government is expecting to use 137.5 million tons of the production target of 550 million tons, Indonesian Minister of Energy and Mineral Resources Arifin Tasrif told a press conference here on Thursday (Jan. 7).

The target of DMO, which rose by 5.5 million tons from that last year, is included in the energy and mineral sector's strategic programs and policies in 2021.

In addition, the government continues to boost downstream industries of coal, one of which is by processing the energy resources into DME.

In order to fulfil the target, business actors which increase the added value of coal or develop downstream industries will receive a royalty of 0 percent.

Royalty for coal is charged as a percentage of the value of production (total revenue less allowable deductions).

The 0 percent of coal royalty is regulated in Article 39 of the Law on Job Creation.

The royalty for Coal Mining Concession Work Agreement is currently at 13.5 percent.

Meanwhile, royalties for Mining Business Permit currently are ranging from 3 percent to 7 percent for open pit coal mines, and from 2 percent to 6 percent for underground coal mines.

Reporting by Indonesia Window