Indonesia's energy ministry has finalized regulations to establish an agency tasked with collecting levies on coal sales from miners to domestic power plants, a senior official said on December 15, with the new body expected to start operations in early 2024.

The Ministry of Energy and Mineral Resources confirmed the rules for the Management Agency Partners (MIP) were finalized after being socialized with coal companies.

"We have finalized the Presidential Decree, it was socialized to all companies. We hope that by the end of this year (the regulations) can be signed," Lana Saria, Director of Coal Business Development at the ministry, told reporters.

Saria was speaking on the sidelines of a discussion on coal strategy in Indonesia's energy transition, held in the capital Jakarta.

The formation of MIP will enable the government to secure coal supplies for domestic power plants, known as Domestic Market Obligation (DMO). Currently, the DMO price for thermal coal used in power plants has been set at $70/t.

Ensuring adequate supplies at affordable prices has been crucial for Indonesia as coal still fuels over 60% of its electricity generation. The Southeast Asian nation is the world's largest exporter of thermal coal and has ramped up renewable energy development in recent years.

The new collection agency is expected to help fund a subsidy scheme for miners obliged to sell a portion of output below market prices to state utility Perusahaan Listrik Negara.

(Writing by Alex Guo  Editing by Harry Huo)
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