Govt may take coal royalty in in-kind form to secure domestic requirements

The government may change the way it collects coal royalty right from taking cash from producers to in-kind form to secure supply for domestic power plants, a government official said Monday.

Director Mineral and Coal at the Ministry of Energy and Mineral Resources Simon Sembiring told Petromindo.Com that the government is seriously considering the option.

Another high ranking official at the office of Coordinating Minister of Economic said that a team was already in advance stage to draft the regulation to change coal royalty collection and state electricity firm PLN had basically agreed to offtake government?s take.

?This way, PLN will be able to secure coal requirement at cheaper price,? said Deputy Minister Wimpy S. Tjetjep. He added that around 10 percent of the in-kind coal would be allocated to coal briquette, which had recently gaining popularity after the government drastically cut kerosene oil subsidy.

He expected that the new regulation could take effect next year.

Under the coal contract of work, coal mining companies are obliged to set aside 13.5 percent of their production as royalty.

Indonesian Coal Mining Association predicted the country would produce 155 million tones of coal this year. PLN predicted that within the next two or three years, domestic power plants coal consumption would increase by two fold to 40 million tones PA within the next two-three years with the operations of new power plants. (alex/godang)