Amendments to ten PKP2B contracts signed

By Thomas Sembiring

Minister of Energy and Mineral Resources (ESDM) Sudirman Said signed today (Wednesday) amendments to ten Coal Contracts of Work (CCoW), better known locally as PKP2B.

The amendments were made in line with Coal and Minerals Law No. 4/2009 which requires the existing PKP2B holders to adjust their contracts to the principles stipulated in the law. The law states the existing Contract of Works (CoW) and PKP2Bs must be respected until their expiry and must later be amended to be in tune with the new law.

"The signing of the amendments of the 10 PKP2B is a concrete step in implementing Law No. 4 of 2009 with the hope that holders of CoWs and other PKP2B will follow suits and accelerate negotiation process and sign amendments," said Sudirman.

There are six aspects in the contracts that have been amended, including acreage area, continuation of mining operations, revenues, processing and refining obligations, divestment obligation, and obligation of using local labor, goods and services.

As a result of the amendments, contract areas have been reduced, allowing the government to increase areas to be designated as State Reserve Area (WPN). The amendments will also push for the development of mining downstream business, adding value to the country?s mining products. The PKP2B holders also expressed commitment to prioritizing local workforce, goods and services, which will increase the local capacity in technology.

The divestment obligation in the amendments will result in the increase in the national ownership in coal mining business.

Director General of Mineral and Coal, Bambang Gatot revealed that companies that signed the amendments have fulfilled their financial obligations in accordance with prevailing law. ?This will result in an increase in state revenues by 6-9%, generated from the 13.5 percent Proceeds from Coal Sales (DHPB), payable in kind in the past, and now in cash,? said Bambang.

Negotiations are in progress with 34 CoW and 73 PKP2B holders on amendments of their contracts. ?All the CoW and PKP2B holders are scheduled to sign their amendments in October 2015,? he said.

No.	Company	Province	Regency/City	Stage
1.	Indominco Mandiri Kaltim	Kalimantan Timur	Kutai Timur, Kutai Kartanegara, Kota Bontang	Production Operation
2.	Jorong Barutama Greston	Kalimantan Selatan	Tanah Laut	Production Operation
3.	Trubaindo Coal Mining	Kalimantan Timur	Kutai Barat	Production Operation
4.	Antang Gunung Meratus	Kalimantan Selatan	Hulu Sungai Selatan, Hulu Sungai Tengah, Banjar, Tapin	Production Operation
5.	Bahari Cakrawala Sebuku	Kalimantan Selatan	Kotabaru	Production Operation
6.	Borneo Indobara	Kalimantan Selatan	Tanah Bumbu	Production Operation
7.	Gunung Bayan PratamaCoal	Kalimantan Timur	Kutai Barat, Kutai Kartanegara	Production Operation
8.	Kartika Selabumi Mining	Kalimantan Timur	Kutai Kartanegara	Production Operation
9.	Mandiri Intiperkasa	Kalimantan Timur	Nunukan, Tana Tidung	Production Operation
10.	Indexim Coalindo	Kalimantan Timur	Kutai Timur	Production Operation

Editing by Johannes Simbolon