The SOEs Ministry decided on Thursday to appoint Hartanto Wibowo, who was previously PLN acting executive vice president of risk management, as the new PLN primary energy director, replacing Rudy Hendra Prastowo.

SOEs Minister Erick Thohir told reporters that the ministry had warned PLN about coal supply disruption since early 2021 amid decreasing domestic output and delivery delays.

“We have discussed this since January 2021. How could this happen again? Therefore, I decided to take firm action, replacing one of PLN’s directors,” he said.

The replacement occurred a few days after the government started banning coal exports due to a shortage in PLN's coal supplies, which risked causing widespread blackouts, said the Energy and Mineral Resources Ministry in a statement on Jan. 1.

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The government blamed the shortage on coal producers that did not comply with Domestic Market Obligation (DMO) rules, which mandate that a quarter of each producer's output be set aside for domestic needs, with prices capped at US$70 per ton.

"Changing directors is a regular occurrence and part of efforts to improve the performance of PLN," said PLN of the reshuffle in a statement.

Erick assured that PLN had secured the needed coal stockpiles for now, but reiterated that it would still have to come up with a long-term solution to ensure supply continuity. 

He said PLN had also managed to secure gas supplies for domestic power plants, which faced a similar supply strain due to rising demand abroad. Luckily, most of PLN's gas comes from state-owned oil and gas giant Pertamina, making it easier for the government to broker a deal.

“In the short term, it has been decided that Pertamina will prioritize its gas supply to PLN,” Erick said.

The Upstream Oil and Gas Special Regulatory Taskforce (SKK Migas) reaffirmed on Friday that oil and gas producers had to prioritize supplying gas to domestic users, including PLN.

SKK Migas monetization deputy Arief Setiawan Handoko said that an average of 58 percent of domestically produced gas had been used within the country every year for the past five years, most of which went to industries and PLN.

"Every time there is a new reserve, we always prioritize PLN before offering the gas to other buyers," he said.

 

Restructuring PLN

The SOEs ministry also plans to review PLN coal supplier subsidiary PT PLN Batubara, which operates five coal mines, a trading company and holds shares in two logistics companies, according to the subsidiary's website.

“This is one of many things we are reviewing, whether this company will be merged with PLN later, or be closed. We have not decided,” Erick said.

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The ministry also plans to create a PLN electricity retail subholding company focused on improving services to consumers, such as by replacing analog electricity meters with smart meters, and a PLN power plant subholding company focused on managing power plants.

Thus, PLN can focus on developing electricity distribution and transmission infrastructure, including to other countries. Erick said: "This is our chance as a nation to sell our electricity to other countries.”