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Market Chatter: Indonesia Faces Summer Blackouts Amid Government's Coal Price Controls

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Indonesia has experienced a summer of blackouts and erratic power as its efforts to control domestic coal prices have discouraged companies from supplying the fossil fuel to the local market, the Financial Times reported Sunday.

The country, which is amongst the largest coal producers in the world, relies on fossil fuels for almost two-thirds of its electricity generation. About 60% of Indonesia's electricity comes from coal. Coal supply in Indonesia declined after the government cut its 2026 coal mining quotas to 600 million metric tons, down from 790 million mt in the previous year, to boost coal prices.

Higher costs associated with the war in Iran also slowed production. Output later increased as suppliers tried, with limited success, to ease shortages, the report said.

Indonesia also requires coal miners to sell 25% of their output domestically to ensure domestic supply and lower prices, with the price of coal supplied to the grid capped at $70 per metric ton, way below current market prices. The low price has encouraged some companies to pay penalties linked to non-compliance instead of supplying the local market.

has reached out to Indonesia's Ministry of Energy and Mineral Resources for comments.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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