State-owned electricity company PLN projects that the company’s coal-fired power plants will require some 100 million tons of coal this year, a 5.4 percent increase from last year.

PLN western region business director Djoko Rahardjo Abumanan said on Wednesday that more coal was needed this year because the company had started to operate more coal-fired power plants constructed under the 35,000 megawatt (MW) program.

He said PLN consumed 92 million tons of coal from the targeted 96 million last year. “This year, the growth will be about 5.4 percent because of the operation of more power plants,” Djoko said as quoted by kontan.co.id.

Starting last year, PLN enjoyed a special coal price, which is lower than the global market price on account of the introduction of the domestic market obligation (DMO) policy.

Under the policy, coal-producing companies are required to allocate 25 percent of their total production for PLN and other domestic needs at a price cap of $70 per ton. By the end of 2018, the companies had put aside of 115 million tons of coal, lower than the initial target of 121 million tons.

The Energy and Mineral Resources Ministry’s mineral and coal director general, Bambang Gatot Ariyano, said several companies had failed to put aside 25 percent of their production for DMO.

“But the number of companies that did not fulfill their obligation is less than 10 percent,” he said, adding that those companies would be punished in the form of production cuts this year. (bbn)