Indonesia state power firm says won't allow repeat of coal crunch

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Excavators pile coal in a storage area in an Indonesian Power Plant in Suralaya, in Banten province January 20, 2010

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JAKARTA, Jan 26 (Reuters) - Indonesian state electricity firm Perusahaan Listrik Negara's (PLN) coal supply for February is safe and it will ensure there is no repeat of a crisis that led to a halt on international coal exports, its chief executive said on Wednesday.

Critically low coal inventory at several domestic power generators led to the world's biggest thermal coal exporter abruptly imposing a month-long ban on shipments of the fuel on Jan. 1, jolting the global energy market.

PLN has made adjustments to its supply management and a new regulation will ensure compliance with so-called Domestic Market Obligation (DMO), chief executive Darmawan Prasodjo told a hearing with the parliamentary energy committee.

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"We will make certain that the coal crisis will not be repeated in the future," Darmawan said.

Officials have blamed the supply crunch on poor compliance with DMO rules, under which miners must sell a quarter of output locally.

The government has said DMO compliance deteriorated last year as global prices surpassed the $70 per tonne maximum price for local generators.

Indonesia, in a new regulation, now requires miners to report DMO fulfilment monthly instead of annually, Darmawan said, which would help with enforcement.

The rules effective Jan. 19 said miners who failed to fulfil their monthly obligation would be barred from exporting and risked operational suspensions and revocation of mining permits. read more

PLN and the energy ministry can now monitor all stages of coal delivery to power plants and issue automated warnings over late shipments.

"We've since saw miners change attitude because once they failed to do loading that day, there would be immediate corrective action," Darmawan said.

The government said the January export ban would apply for those yet to meet their DMO. As of Jan. 20, Indonesia has lifted the suspension for 139 compliant companies. read more

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Reporting by Bernadette Christina Munthe; Writing by Fransiska Nangoy; Editing by Martin Petty

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