Indonesia to charge higher coal mining royalties under revised rules

Tugboat pulling heavy loaded barge of coal cruising Mahakam River in Borneo, Indonesia. ( Stock Photo.)

Indonesia’s Energy and Mineral Resources Ministry has proposed revising regulations governing mining rights to include higher royalty payments and earlier applications for permit extensions.

Under the proposals, royalties on coal sales to central government would rise to 15% from 13.5%, Bambang Gatot Ariyono, the ministry’s Director General of Coal and Minerals, told parliament on Thursday.

The change in mining rules would increase the government’s share of coal mining revenue to 79%

The change in the royalty rate would be imposed when coal miners shift from so-called contracts of work to special mining permits which is required under the 2009 mining law.

The revised government regulations are currently awaiting approval from the president, Energy Minister Ignasius Jonan told parliament, without saying when the new rules would be applied.

The change in the mining rules would increase the government’s share of coal mining revenue to 79% from around 68% currently, Ariyono said.

“The holders of coal contracts of work can have permit extensions without going through a bidding process, if they agree on better state revenue,” Ariyono said.

The ministry is also revising mining rules to allow miners to submit for a mining permit extension within five years before it expires, up from two years currently.

(By Wilda Asmarini, Fransiska Nangoy and Bernadette Christina Munthe; Editing by Ed Davies and David Evans)


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