The Indonesian government has guaranteed the Philippines a continuous supply of coal that may be used by power plants in the country.
In a report by the Manila Bulletin, Energy Secretary Raphael P.M. Lotilla said that since 98% of the country’s coal supply comes from Indonesia and 80% of it comes from abroad, the bilateral deal with that country ensures the Philippines’ ongoing access to reliable coal supply.
A talk with the Indonesian Minister for Energy and Mineral Resources Arifin Tasrif yielded a steady supply that would spare the country should there be irregularity in coal supply, similar to the incident in the early months of 2022 when Indonesia had curtailed its coal exports.
Last year, the country’s coal-fired power plant owners and operators had urged the Department of Energy (DOE) to contact Indonesia at the time to prevent the shutdown of their generating facilities due to a shortage in fuel.
In response, Indonesia said that the restriction was necessary to first meet domestic demand because coal production had been declining. If they didn’t institute a cessation of production, they would run out of their own supply.
Indonesian coal miners have a greater likelihood of selling their products to foreign customers now that the crisis has been resolved since they can get greater prices than they can from domestic consumers, the DOE official said.
Lotilla added that there is a two-tier pricing structure, and since coal prices for domestic use were considerably less than those for export, Indonesian miners preferred to sell on the global market.
Furthermore, the Energy Secretary said that during the bilateral discussions with the Indonesian minister, a “memorandum of cooperation” was agreed upon, specifically focusing on addressing potential emergency response measures in case the supply dwindles again.