Stricter Oversight on Mining Sector Being Pledged

Indonesia's coal mining industry is set to generate cheap energy for millions — but with a very large human cost. (Reuters Photo/Dwi Oblo)

By : webadmin | on 8:35 PM August 28, 2014
Category : Business, Commodities

Jakarta. Government ministries and law enforcement agencies are pledging on more coordinated efforts and firm supervision of the mining sector to minimize illegal and unlawful practices.

The Corruption Eradication Commission, which is the antigraft agency known as KPK, summoned on Wednesday industry players and government officials to discuss the unlawful practices that have plagued the mining industry for years. During the discussion, it was found that not only district governments are too loose in issuing mining permits but many mining companies have failed to uphold their obligation to the governments.

The director general for coal and mineral resources, R. Sukhyar, said that around 17 contract of works holders in mining and 23 contract of works holders in coal had yet to pay in full their coal production fund (DHPB).

Sukhyar said those miners must fulfill their obligations by the end of October or risk having their contracts terminated. “If they do not pay by October, we will declare them in default, but they will have time to fix it. If they don’t fix it, we will terminate their contracts.”

Coal miners that are still in DHPB arrears include Adaro Indonesia, the core operating subsidiary of the country’s second-largest coal miner Adaro Energy, and Arutmin Indonesia, a unit of Bumi Resources, the largest coal miner.

Fuad Rahmany, the director general of tax at the Finance Ministry, said that there are also miners that have yet to pay their tax obligation. Fuad, though, refused to disclose identify them by name.

The failure to pay DHPB and the tax might have stemmed from different interpretations of the law, according to Fuad. “Some of them do not pay because they don’t think that they have to pay. It’s because of a different interpretation of the law.”

From the government’s side, the overlapping permit was a recurring issue. According to data from the Energy and Mineral Resources Ministry there are 37 mining and coal contract of works holders that suffered from the issuance of overlapping permits.

Busyro Muqoddas, the KPK’s deputy chairman, said that the solution of the issue is by removing the district government’s authority to issue mining permits. “The objective [of this discussion] is to revise the regional autonomy law. It would be better if the authority [to issue permits] being handed over to the provincial government.”

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