Ministry mulls coal royalty, output hike to meet revenue target

The Directorate General of Mineral and Coal is considering whether to raise coal output or increase royalty rate to help meet this year?s non-tax revenue target as it has dropped an earlier plan to impose export tax on coal, Bisnis Indonesia reported on Tuesday.

The paper quoted Director General of Mineral and Coal R. Sukhyar as saying that of this year?s Rp 52.2 trillion non-tax revenue target from the mineral and coal sector, about 80 percent will come from the coal sector.

He said that he would propose to the minister of energy and mineral resources two options on how to meet the target. The first is to increase the country?s coal production this year to 455 million tons from the earlier target of 425 million tons. This option will be combined with a slight increase in the royalty tariff of IUP coal miners from the current 3, 5 and 7 percent rates (depending on calorific value of their output) to 7, 9 and 13.5 percent.

The second option is to maintain the production target as originally planned, but impose a flat 13.5 percent royalty tariff for all of the IUP coal miners. Coal miners holding the so-called PKP2B coal mining contract works have already been imposed with the 13.5 percent rate.

Sukhyar previously said that the ministry will proposed to the Ministry of Finance to drop an earlier plant to impose export duty on coal as it would cause heavy burden for the miners amid the lingering downturn in the global coal market.

Meanwhile, Executive Director of the Indonesian Coal Mining Association (ICMA) Supriatna Suhala said that coal miners opposed any plans to increase the royalty tariff given the current weak coal price.

He suggested the government to get tax from the illegal coal miners operating in the country. (*)