High royalty overshadows coal price rise

Rabu, 07 Desember 2016 / 12:02 WIB

High royalty overshadows coal price rise

JAKARTA. Ministry of Energy and Mineral Resources (ESDM) is not going to change the royalty for the Mining Business License (IUP). In fact, Coal Price Reference (HBA) in December 2016 has now reached US $ 101.69 per ton.

As information, the plan to increase royalties for IUP was circulating in 2014. However, the plan dissolved in late 2015, as the coal prices dropped to the level of US $ 40 per ton.

At that time, the government has drafted a revision of Government Regulation No 9/2012 on the Types of Non-Taxation State Revenues Applicable in the Ministry of Energy and Mineral Resources (ESDM). The draft mentions that increase in the royalty of the coal with the calories of less than 5,100 kilocalories / kg (kcal / kg) is ranging from 3% to 7%.

Meanwhile, the royalties of coal with the caloric level of 5,100 Kcal / kg - 6,100 Kcal / kg and more than 6,100 kcal / kg will increase from 5% to 9% and from 7% to 13.5%, respectively.

Director General of Mineral and Coal at the Ministry of Energy and Mineral Resources (ESDM) Bambang Gatot Ariyono stated that the government has not planned yet to further increase the royalties. The government will still consider some influencing factors, such as the coal price.

Head of Communications, Public Information and Cooperation Service at the Ministry of Energy Sujatmiko added the royalties are unlikely to further increase, on the grounds that government focuses on maintaining the sustainability of the investments in coal sector. Sujatmiko said that the ministry is still using the existing regulation in determining the royalty rates. Based on the regulation, the royalties rates are 3%, 5%, and 7%.

Deputy Executive Director of the Indonesian Coal Mining Association (ICMA) Hendra Sinadia assessed that the discussion on the higher royalties’ rates will be irrelevant, on the grounds that the coal price remains unstable.

The coal price may even fluctuate in an immediate time. “The increase in the coal price is unlikely to continue, on the grounds that the government of China will revise their policies,” he told KONTAN, Tuesday (6/12).

In addition, he considered that the increases in royalties would likely have negative impacts on the supply of coal for electricity generation mega-projects programs, which are being endorsed by the government.

Meanwhile, Corporate Secretary of PT Bukit Asam Tbk Adib Ubaidillah said that the royalties will increase if the shipment price increases, because the royalties paid by the seller prior to the shipment. "So far, PT Bukit Asam Tbk has always complied with the rules," said Adib, Tuesday (6/12). (Muhammad Farid/Translator)

High Royalty Overshadows Coal Price Rise

Reporter: Pratama Guitarra
Editor: Sanny Cicilia
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