Govt prepares new formula for coal royalty hike

The Ministry of Energy and Mineral Resources (MEMR) is preparing a new formula to increase the coal royalty of miners holding the so-called IUP mining permit, reports said Monday.

The government initially planned to increase the coal royalty of the IUP miners from the current 3-7 percent to 13.5 percent to be equal to the royalty of the holders of the PKP2B miners.

But the government suspended the plan following protest from miners and due to the drop in coal prices.

Paul Lubis, a director at MEMR said that a new formula is now being finalized by the ministry linking the royalty hike with the calorific value of the coal and the government coal benchmark price or HBA.

Paul was quoted by Kontan as saying that the royalty of low CV coal (below 5,100 kcal /kg), medium CV coal (5100-6100 kcal/kg), and high CV coal (more than 6100 kcal/kg) was expected to be increased from 3, 5, and 7 percent to 7, 9 and 13.5 percent, respectively this year.

According to the new formula, the royalty will be raised gradually depending on the HBA. If HBA surpasses $80 per ton, the royalty of the low rank coal will be increased progressively to 7 percent, Paul said, but added that the formula for the medium and high CV coal has yet to be determined. (*)