Ministry of Finance refuses to change coal royalty split

The Ministry of Finance has said that the change in the coal royalty split from the current 80 percent and 20 percent composition could not be made until the regulation No: 13/2000 on coal royalty and production is removed, Bisnis Indonesia reported on Thursday.

Director General of Financial Institutions at the ministry, Darmin Nasution, said in Jakarta on Wednesday that the split in the coal royalty between the central government and local administration will remain at the current level if the regulation is not changed.

Under the regulation No: 13/2000, the local administration receives 80 percent from the coal royalty and the central government gets another 20 percent. The amount of the royalty is between five percent and seven percent of the total coal production of each coal mining companies, depending on the quality of the coal. The royalty is set at seven percent if the coal quality is above the average.

Nur Adnan, a member of the Commission VIII of the House of Representatives (DPR) said that the royalty split should be removed to allow the local government to receive higher amount of funds from the country?s coal mining operators.

Although the percentage of the royalty allocated to the local government is much higher than those given to the central government, the actual receipt of the provincial administration from coal mining operators is much smaller, he said.

Besides royalty, the coal mining companies are also required to pay Value Added Tax of five percent and some other percentages to the Ministry of Energy and Mineral Resources for research and development purposes. With taxes and such research funds, the total amount paid by mining companies is 13.5 percent of their coal production.

Nur said that the larger portion of the royalties should be given to provinces because, besides the royalty, the central government also receives taxes from the coal mining operators. (*)