Government cancels royalty hike for low rank coal

The Ministry of Energy and Mineral Resources, and the Ministry of Finance?s Fiscal Policy Agency are currently formulating a new coal royalty policy, canceling an earlier plan to increase the royalty tariff of low rank coal, Kontan reported on Thursday.

?We?ll focus on formulating the increase in the royalty of medium to high calorie coal,? said Director General of Mineral and Coal Bambang Gatot Ariyono said as quoted by the paper.

The government has been mulling over the past year a new policy to increase the royalty tariffs of coal produced by miners holding the IUP mining business license in a bid to increase revenue for the state. Under the initial plan, the current royalty tariff of low rank coal of 3 percent will be increased to 5 percent, the tariff of medium calorie coal to be increased from 5 to 9 percent, and the royalty tariff of high rank coal from 7 percent to 13.5 percent, equal to the royalty tariff of miners holding the coal contracts of work (PKP2B).

But miners have protested the planned policy given the current drop in coal price. Bambang said that as the price of coal has tumbled to near the production cost, the government has decided to cancel the planned royalty hike for low rank coal, instead focusing on medium to high calorie coal. (*)