Hundreds of mining investors facing uncertainties over contract

Hundreds of investors are now facing uncertainties over their investment plans in the country after the ministry of energy and mineral resources decided to stop processing their applications for contracts of work (COWs).

Director general of mining at the ministry Surna T. Djajadiningrat said on Tuesday the ministry had decided to stop processing the applications for COWs as it had to transfer its mining licensing right to the regional administrations next year in line with the autonomy law.

The ministry will deliver all the applications for COWs to the regional administrations for further processing when the autonomy law comes into force on January 1, 2001, Surna said.

"There are about 300 applications for COWs, which are being processed. We have decided to stop processing the applications and will transfer them to the regional administrations for further processing, " Surna told Petromindo.Com on the sidelines of the meeting between the House of Representatives' Commission VIII, which oversees mines and energy affairs, with the ministry of energy and mineral resources.

Surna hinted that the regional administration had not yet been prepared to take over the processing of the contracts, as such the investors, who had applied for the COWs, might have to wait for a long time for the regional administrations to complete the processing of their applications.

Surna said on Nov. 6, the ministry would issue a regulation containing guidelines for the regional administrations to exercise their mining rights, including processing the applications for COWs.

"A regional administration could only issue a license after it has a proper mining institution. As long as its organization, regulations and human resources are not adequate, it is not allow to issue mining permits," Surna cited a point in the regulation.

Foreign investors have repeatedly voiced concerns over the central government's plan to transfer the mining licensing rights to the regional administrations, citing the poor governmental organizations, lack of skilled human resources and modern facilities in the regions.

"Some regions have not yet had any single computer. How are they going to process the applications in such a condition?" a mining executive earlier told Petromindo.

Investors proposed that the central government gradually transfer the mining rights to the regions until the regions are capable to exercise the rights.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro recently proposed the idea of gradual transfer in a meeting with regents from across the country but, Purnomo said, the regents turned down the idea. (Alex)