Govt honors Bukit Baiduri contract of work despite failure to pay royalty

PT Bukit Baiduri Energi (BBE) has yet to pay royalty arrears and fines amounting to around US$3.2 million despite the government’s letter asking the company to do so, Investor Daily reported Thursday

 

Speaking in a hearing with the House of Representatives’ Commission VII for energy, mineral resources, research and technology and environment in Jakarta Wednesday, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the remaining portion of royalty that BBE has to pay for the period of 2004 – 2006 reaches US$ 3.144 million and Rp 333.10 million. “Besides, the company is also obliged to pay US$ 463,150 and Rp 82.87 million in fine for failing to pay royalty on time during the period,” he said.

 

Purnomo said that the ministry had sent a letter dated April 2, 2007 in regards to its royalty obligation but “up till now, the company has not responded to the letter and so we have to wait for (the response),” he said.

 

He asserted, however, that the government can not impose sanctions against the company without any specific reasons as, somehow, the government has to honor the existing contract of work. “The decision to terminate a company’s contract of work is made based on three points, namely a court decision, a violation of contract and an agreement signed by the two parties (government and the contractor).”

 

BBE holds five contract of works (KP) for adjoining coal concessions in East Kalimantan with a total area of more than 6,000 Ha. It produced 1.69 million tons of coal in 2005. (*)