Fiscal issue remains major hurdle to mining contract amendment
Tuesday, April 18 2017 - 03:17 AM WIB
Petromindo
Fiscal issue remains a major hurdle for the government to reach agreement with remaining coal miners in amending their coal contracts of work (PKP2B), according to Director General of Mineral and Coal at the Ministry of Energy and Mineral Resources Bambang Gatot Ariyono.
He said on Monday that the PKP2B coal miners continue to insist they can have fiscal certainty once their contract is amended. He said that the fiscal issue is the domain of the Ministry of Finance.
The PKP2B coal miners consider that their current contracts to have better certainty in terms of fiscal issue as they apply nailed-down principle with regards to financial obligations to the state such as tax and royalty. Meanwhile, if their contracts are amended, the government will apply prevailing regulation principle, which means that taxes and royalty can change over time depending on the regulations.
Gold and copper giant PT Freeport Indonesia has also been asking for similar fiscal certainty when it converts its mining contract of work (COW/KK) into special mining business license (IUPK) as part of conditions required by the government for the company to be able to resume export of copper concentrates. The company and the government are still engaged in negotiation talks among others with regards to the issue of fiscal certainty.
The Ministry of Energy and Mineral Resources last week signed agreement with 15 PKP2B coal miners and 12 mineral KK miners for the amendment of their mining contracts. Of the total 70 PKP2B coal miners, 30 have yet to agree on amending their contracts. Meanwhile, of the 32 KK mineral miners, 11 have yet to sign amendment of their contracts.
Minister of Energy and Mineral Resources Ignasius Jonan has said the ministry aims to conclude contract amendment process this year, and will report to President Joko Widodo on what actions to be taken against miners which have yet to amend their contracts.
The government has been struggling to push miners to amend their contracts to comply with the stipulations set in the 2009 Mining Law. The amendment process should have been completed in 2010. (*)