BPK?s royalty version hampers coal contract renegotiation

The ongoing renegotiation of the first generation of the PKP2B coal mining contract of work has been hampered by a clause regarding state revenue as some miners opposed the royalty calculation made by the Supreme Audit Agency (BPK), Bisnis Indonesia reported on Tuesday.

The paper quoted Chairman of the Indonesia Coal Mining Association (ICMA) Bob Kamandanu as saying that the BPK royalty version would force miners to pay higher amount of royalty, which is deemed quite burdensome given the current drop in the price of coal.

Bob pointed out that according to new arrangement based on the BPK calculation, the miners must pay the 13.5 percent royalty based on the price of coal when the commodity reaches the vessel, which his higher compared to the price of coal at the jetty due to transportation cost. Under the current arrangement, miners pay the royalty based on the price of coal at the jetty.

Meanwhile, Director General of Mineral and Coal R. Sukhyar said that the government plans to provide a two percent discount of the royalty tariff to coal miners operating underground mine. He said this is part of the planned revision of Government Regulation No 9/2012.

In a related development, Director for Coal Management and Development Bambang Tjahjono said that renegotiation for the amendment of the second generation of PKP2B coal mining contract with four miners were still in progress.

Of the four companies, three including PT Antang Gunung Meratus, PT Marunda Graha Mineral, and PT Riau Bara Harum have signed MoUs on the amendment of the coal mining contract. Meanwhile, PT Barasentosa Lestari has yet to sign an MoU due to disagreement over divestment obligation.

Bambang also said that eight coal miners holding the second generation PKP2B contracts and one miner holding the first generation PKP2B contract are set to sign the amendment of their contracts.

The firms include PT Kartika Selabumi Mining, PT Bahari Cakrawala Sebuku, PT Mandiri Inti Perkasa, PT Borneo Indobara, PT Gunungbayan Pratama Coal, PT Jurong Barutama Greston, PT Trubaindo Coal Mining, PT Indexim Coalindo, and PT Indominco Mandiri. (*)