JAKARTA: A corruption investigation into two coal suppliers for power plants, which authorities suspect contributed to blackouts across Sumatra, Java and Kalimantan, has raised concerns about transparency in the energy sector and the government’s repeated criminal probes into private companies following major disasters.
Experts said the wide gap between the domestic market obligation (DMO) coal price cap for power generation and higher global prices, combined with weak oversight, has created a moral hazard for unscrupulous suppliers.
However, they doubted that supplies from the two companies under investigation could have caused such widespread blackouts, noting that state-owned electricity company PLN sources coal from hundreds of suppliers.
The National Police have launched an investigation into alleged corruption involving local coal miners that may have led to rolling blackouts in several regions across Indonesia, causing an estimated five trillion rupiah (US$277.5mil) in economic losses.
In a press conference on Monday, the National Police’s Criminal Investigation Department (Bareskrim) and the Corruption Eradication Corps (Kortas Tipidkor) escalated the case status from a preliminary inquiry to a formal criminal investigation, targeting alleged corruption and money laundering in coal procurement for coal-fired power plants from 2018 to 2026.
Investigators suspect irregularities in coal procurement involving two companies identified only by their initials, UBP and BRA, but have not yet named any suspects in the case.
The Indonesian Coal Mining Association (Apbi) has urged authorities to handle the case with firmness, objectivity and transparency, while cautioning against sweeping judgements that could harm the broader industry.
Apbi executive director Gita Mahyarani said the association could not yet comment on the substance of the case or potential state losses, as the matter had entered the investigation stage and final official results were still pending.
“However, in principle, any alleged irregularities in the primary energy supply chain must be addressed firmly, objectively and transparently, as the supply of coal for electricity generation is directly related to national energy security,” she told The Jakarta Post on Wednesday.
Gita stressed the need to view the legal process proportionately, upholding the presumption of innocence and avoiding sweeping generalisations about the entire sector.
“For compliant business actors, legal certainty, supply security and market confidence must be maintained,” she said.
Imaduddin Abdullah, international collaboration director at the Institute for Development of Economics and Finance, said the root of the coal procurement problem lies in the wide price gap created by the DMO policy.
The scheme requires coal miners to sell 25% of their output to PLN at a maximum of US$70 per tonne, far below the government-set coal benchmark price, which is commonly used in commercial transactions and stood at US$126.58 per tonne in July.
This gap, while not a direct cause of corruption, creates moral hazard when oversight is weak, according to Imaduddin.
“If governance is weak, this gap can open opportunities for moral hazard,” he told the Post on Wednesday, urging that DMO evaluation be accompanied by stronger supplier transparency.
Imaduddin noted that the case also underscores the dangers of over-centralisation on coal.
“When the coal supply chain is disrupted, the impact can directly hit electricity reliability.
“This is a single point of failure,” Imaduddin said, calling for accelerated renewable energy diversification, storage and grid strengthening.
Ardhi Ishak, head of industrial relations at the Indonesian Mining Experts Association, acknowledged the case’s severity and urged a comprehensive investigation into the case.
However, he downplayed its direct contribution to recent blackouts, noting that PLN relies on hundreds of coal suppliers, including concession holders.
“Based solely on this, its contribution is insignificant,” he said.
Echoing Imaduddin’s remarks, Ardhi also pointed to the eight-year-old DMO price cap of US$70 per tonne as a possible trigger.
“This gap may lead irresponsible parties to seek ways to circumvent the system,” Ardhi added, calling for improved supply chain management.
Energy and Mineral Resources Ministry coal and mining director general Tri Winarno did not immediately respond to the Post’s request for comment.
Charges against the coal miners are not the first major allegations levelled by President Prabowo Subianto’s administration against private companies following a disaster.
After deadly floods and landslides struck Aceh, North Sumatra and West Sumatra following Cyclone Senyar on Nov 25 last year, claiming more than 1,000 lives, the government revoked the mining and forestry permits of several companies whose operations were deemed to have contributed to the disaster, although it later allowed some of them to resume operations.
Public policy expert Trubus Rahardiansah highlighted the government’s tendency to shift blame to private-sector actors during crises, a pattern he said is evident in public-private partnership projects, even as authorities remain involved in assessing risks and supervising implementation.
“This creates a tendency for government institutions to retain a positive image while private companies bear the legal and reputational consequences when major incidents occur,” he told the Post on Wednesday.
Trubus also criticised what he described as a “reactive” governance approach, in which authorities focus on taking corrective action after failures occur rather than strengthening preventive oversight.
He further argued that legal processes tend to emphasise individual accountability over broader chains of decision-making. — The Jakarta Post/ANN
