Energy Ministry Faces Scrutiny Over Sumatra, Bali Blackouts Amidst Coal Corruption Allegations

The Ministry of Energy and Mineral Resources (ESDM) is being held accountable for the recent total power outage, or blackout, that affected several regions in Indonesia, including Sumatra and Bali. The Center of Energy and Resources Institute (CERI) assesses that the coal corruption scandal, which led to the power outages, stems from the negligence of the Director General of Minerba within the Ministry of Energy and Mineral Resources regarding the governance of coal supply fulfillment. CERI suspects that the lack of coal supply arises because many coal mining companies fail to meet their Domestic Market Obligation (DMO) requirements but are still permitted to produce and export abroad. CERI argues that regulatory instruments available to the Ministry of Energy and Mineral Resources should have prevented this. "The Ministry of Energy and Mineral Resources, the Director General of Mineral and Coal, should be responsible when there are irregularities," stated CERI Executive Director Yusri Usman. He added that the Ministry should be able to monitor companies not fulfilling their DMO obligations using the Simbara system, which provides real-time information on production, royalties, and DMO commitments. Yusri expressed surprise that mining companies could still export when they had not met their DMO. He explained that typically, a violation would prevent a company from obtaining an export permit, and miners require an export recommendation from the Director General of Mining to the Director General of Foreign Trade. Furthermore, Yusri highlighted the leniency of penalties imposed by the Ministry on companies failing to meet DMO. He noted that the cost of coal production for power plants is around $45 per ton, while the fine for not meeting DMO is only $5 per ton. With international market prices around $68 per ton, companies still profit significantly by exporting, even after paying the fine. CERI believes the Ministry's negligence in utilizing its instruments, such as RKAB (Work Plan and Budget), Simbara, and export recommendations, is the primary reason for the energy supply deficit that caused the recent blackouts. While the Corruption Tipikor Unit of the National Police has identified PT OBP and PT BRA as suspects in coal procurement irregularities leading to the blackout, CERI rejects this assertion, arguing that the supply from these two companies constitutes a very small fraction of PLN's total needs.