Photo by Bumi Resources

JAKARTA (TheInsiderStories) – The Minister of Mineral and Energy Resources has signed contract amendments with 13 mining firms holding so-called ‘Coal Contract of Work’, in order to align with the Mining Law and applicable regulations.

The thirteen companies include four holders of the first-generation of Coal Contract of Work, namely, PT Arutmin Indonesia, PT Kaltim Prima Coal, PT Berau Coal and PT Kideco Jaya Agung, along with one second-generation Coal Contract of Work, namely, PT Barasentosa Lestari.

The remaining eight companies are the holders of third-generation Coal Contracts of Work, namely, PT Intitirta Primasakti, PT Juloi Coal, PT Kalteng Coal, PT Lahai Coal, PT Maruwai Coal, PT Pari Coal, PT Ratah Coal, and PT Sumber Barito Coal.

Several important issues remain in the amendments, including agreement on working areas, renewal of mining licenses for special extended production operations, as early as 2 years and as late as six months before concluding their agreed period of operation.

For first-generation of Coal Contract of Work, State revenues from regular concession fee are to rise from $1 to $4 per hectare, while the coal product revenue sharing fund (DBHPB) is set at 13.5 per cent.

This revenue sharing was previously set in the form of ‘in kind’, but now it takes the form of ‘in cash’’ and ‘lump-sum payments’, with a significant increase over existing rates.

For the second-generation Coal Contract of Work, State revenues from coal product revenue sharing fund are set at 13.5 per cent, while previously they were set in the form of ‘in kind’. Today, this is set in the form of ‘in cash’, and all financial obligations are in accordance with existing regulations.

As for holders of the third-generation Coal Contract of Work, State revenue from the coal product revenue sharing fund is set at 13.5 percent, in the form of ‘in cash’ and all financial obligations are in accordance with prevailing regulations.

The combined revenues to be received by the government from the 13 Coal Contract of Works amendments reach US$68 million.

The amendments were implemented by revising, adding and deleting some articles, in order to comply with Law Number 4/ 2009 on Mining.

From 30 articles in the first-generation Coal Contract of Work, there are 17 articles that were revised, along with the addition of one article. As for the 30 articles in the second-generation Coal Contract of Work, there are 22 articles that were revised.

For the 33 articles in the third-generation Coal Contract of Works, 23 articles were revised.

There are 18 Coal Contract of Works left to be amended in the future, as these companies fail to meet agreement on issues including state revenues on added-value tax, building tax, local taxes and fees as stipulated in prevailing laws.

 Written by Yosi Winosa, email :yosi.winosa@theinsiderstories.com

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