PLN to handle government?s coal royalties

The government will assign state-owned electricity company PT Perusahaan Listrik Negara (PLN) to handle and manage its coal royalties from the country?s coal mine contractors soon after it changes the royalty payment from cash into "in kind" (in the form of coal).

Under the coal contract of work (CCoW), coal-mining companies are obliged to set aside 13.5 percent of their annual production as royalty to the state. At present, however, the coal companies pay the royalties in cash rather than in kind.

J. Purwono, the director general of Electricity and Energy Use at the Ministry of Energy and Mineral Resources, said in Jakarta on Tuesday that that his office was revising the Presidential decree No. 75/1966 which regulates the payment of the 13.5 percent royalty payment from coal mine contractors.

For this purpose, the revised Presidential decree would also set the prices of the coal depending on their qualities from the government, he said.

He said that the revision of the Presidential decree became more urgently needed at present as most of the coal miners preferred to export their coal production rather than sell them in the domestic market, leaving local buyers particularly PLN as the country?s largest user of the energy in shortage of coal supply.

In order to secure enough coal supply in the domestic market, the ministry will also soon implement its Domestic Market Obligation (DMO) policy which will oblige coal miners to sell a certain portion of their production in the domestic market.

Meanwhile, PLN said that it planned to build two coal terminals, one in East Kalimantan and another one in Bangka Belitung province, to store all the coal to be received from the government?s royalties and those to be sold under DMO policy.

PLN said that it would assign its subsidiary PT PLN Batubara to build and operate the coal terminals, adding the feasibility study will complete this year and expected to operate next year. (*)