House wants to form new agency for mining

The House of Representative is proposing the setting up of a special agency specifically tasked with handling the Contracts of Work (CoW) for big mining projects, a senior lawmaker says.

 

He added that provision for the new agency would be made in the mining bill, which is still under deliberation in the House.

 

The agency would represent the government in negotiating mining contracts with investors, according to the chairman of the House energy commission, Agusman Effendi.

 

“We haven’t decided whether the agency will be an independent one like BPMIGAS (the upstream oil and gas regulator), or take a similar form to that of a state agency,” Agusman said. He revealed that the commission had decided that the CoW system would continue in existence for large mining project involving a total investment of more than US$250 million. 

The mining bill, which has been under deliberation in the House for more than a year, is expected to be passed into law next month, Agusman said.

 

The proposed setting up of the agency to negotiate and issue CoWs represents a compromise between those favoring the current contractual system and those favoring the introduction of a permit system.

 

Under the permit, system, the government - including the local governments in the areas where the projects are located - has the right to revoke the permits should investors fail to satisfy the requirements set out in their permits.

 

Simon Sembiring, the director general, of geology and mineral resources at the Energy and Mineral Resources Ministry, said the government welcomed the proposal as it was in line with the its goal of ending its business role under the CoW regime.

 

“The government’s role is to regulate not to act as an entity that can engage in business deals and sign contracts with third parties,” Simon explained. “That’s why we need this special agency,”

 

Meanwhile, Indonesian Coal Mining Association chairman Jeffrey Mulyono told the Jakarta Post that the mining companies would first have to study the details of the proposal.

 

“We have no idea what the agency will be like. We will have to look into the matter further,” he said.

 Similarly, Association of Indonesian Mining Professionals chairman Irwandy Arif said that the government needed to set out a detailed description of the agency and its powers in a government regulation to avoid misconceptions. (*)