Update 1: Govt to cut royalty for low rank coal

(Adds Indonesian coal reserves on sixth paragraph)

The Indonesian government is preparing a regulation to cut royalties from low-rank coal as part of the effort to boost investment to boost such coal.

Director general of mineral, coal and geothermal resources at the Ministry of Energy and Mineral Resources Simon Sembiring said the royalty will be cut to between 6 and 7 percent from 13.5 percent at present.

?The move is aimed to boost the production of low rank coal to support the 10,000 MW power plant project, coal liquefaction and gasification,? Simon said in the 6th CoalTech Conference on Monday in Bali.

Simon said Minister of Energy and Mineral Resources Punomo Yusgiantoro had sent a letter to President Susilo Bambang Yudhoyono containing a proposal to cut the royalty. The letter is expected to be discussed in a Cabinet meeting.

Low rank coal is the coal type with the calorie content of 5,000 kcal/kg.

According the government?s data, 60.5 billion tons of coal reserves have been discovered in Indonesia, of which, according to Simon, 60 percent is categorized as low-rank coal. Investors, however, are reluctant to develop the type of coal under the existing contract system which obliges coal contractors to give 13.5 percent of their output to the government in royalty. (Alex)