The Energy and Mineral Resources Ministry plans to oblige coal mining firms in the country to allocate a total of 114 million tons of the fossil fuel for the domestic market obligation (DMO) in 2018, up 5.65 percent from the 107.9 million tons this year.

About 80 percent of the allocation will be used to support operations of power plants, said Agung Pribadi, the ministry’s director for the minerals and coal business.

“We have gathered all stakeholders, and they have agreed to allocate 114 million tons of coal next year, including for coal-fired power plants, smelters and the textile and cement industries,” Agung told The Jakarta Post on Tuesday.

State electricity firm PLN has projected that coal demand for electricity generation will soar by 18.4 percent to 90 million tons in 2018, following an increase in the capacity factor of its power plants in certain regions, including Sumatra.

The increase in the capacity factor, which is the ratio of the actual energy produced by a power plant to its maximum generation capacity, is based on the assumption that PLN’s electricity sales will grow by more than 5 percent next year.

The 2018 growth prediction for PLN’s electricity sales is higher than the 3.1 percent year-on-year increase to 163.6 terawatt hours (TWh) seen in the first nine months of 2017.

As of 2016, Indonesia operated power plants of various types with a combined capacity of 51,860 megawatts. Nearly 48 percent of that comes from coal-fired plants. Meanwhile, combined-cycle facilities and gas-fueled plants accounted for another 21.7 percent and 7.6 percent, respectively.

According to its latest electricity procurement business plan (RUPTL), PLN envisions the development of additional coal-fired power plants with a total capacity of 31,900 MW in the 2017-2026 period. Hence, its annual coal consumption is projected to soar to more than 150 million tons by 2020.

The domination of coal in national electricity generation would eventually decelerate gas demand growth, said Edi Saputra, senior analyst for gas and power at Wood Mackenzie Asia Pacific.

He said PLN would still rely on coal as the cheapest source of energy for its base load power plants, while gas-fueled facilities would only be used as peakers, which generally run only during peak hours of electricity demand.

“If the utilization of gas-fueled plants only reaches 30 to 40 percent, gas demand won’t be as big as predicted,” Edi said.

Even today, the government is struggling to find domestic buyers for all of Indonesia’s LNG cargoes, as PLN has prefers to use natural gas or coal.

As of October, there were still 14.18 uncommitted LNG cargoes for this year and 37.51 cargoes for 2018, according to the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas). Each LNG cargo is equal to around 125,000 cubic meters of gas.

PT Badak NGL, the operator of a major LNG plant in Bontang, East Kalimantan, failed to find domestic buyers for 38 LNG cargoes this year, or 22.2 percent of its full-year production of 171 cargoes. Thus, it has sold those 38 cargoes on the spot market.

Badak has estimated there will be 47 uncommitted LNG cargoes next year from a total production of around 160 to 170 cargoes.

Therefore, state-owned energy giant Pertamina, which controls a stake of 55 percent in Badak, has started looking for retail customers able to absorb the excess LNG.

“For instance, we have started supplying LNG to hotels in Bandung [West Java], Balikpapan [East Kalimantan] and Ambon [Maluku]. The volume is relatively small, but it is still commercially viable,” Pertamina gas director Yenny Andayani said.

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