Indonesia has amended contracts with 13 coal mining companies, including some of the country’s biggest producers of the fossil fuel, as part of a shift toward a new mining permit system it expects to boost government revenues.
Under the amendments to the Coal Contracts of Work (CCOWs), coal mining companies agreed to pay 13.5 percent royalties on coal sales as a cash lump sum.
The companies can apply for an extension under a Special Mining Permit (IUPK) up to two years before their current contracts expire.
Among the companies that signed contract amendments at an event in Jakarta on Tuesday (14/11) were Bumi Resources units Kaltim Prima Coal (KPC) and Arutmin Indonesia, as well as Berau Coal Energy and Kideco Jaya Agung.
The amendments for these generation 1 contracts of work also increase land rent to $4 per hectare from $1 per hectare previously, and will take effect immediately.
For later generations contracts used by companies including Barasentosa Lestari, Intitirta Primasakti, Juloi Coal, Kalteng Coal, Lahai Coal, Maruwai Coal, Pari Coal, Ratah Coal and Sumber Barito Coal, the changes come into effect in 2018.
A spokesman for Bumi Resources, Indonesia’s biggest coal miner by output, confirmed the contract amendments by the two subsidiaries, noting that Arutmin’s contract would expire in almost two years while KPC’s contract is due to expire in 2021.
The spokesman declined to comment when asked what specific benefit the amendments would give to Bumi.
A spokesman for Berau did not immediately respond to a request for comment on the matter.
According to Energy and Mineral Resources Minister Ignasius Jonan, the government expects an increase in state revenue of $68 million from the amendments.
There were still another 18 coal mining companies using contracts of work that had not yet signed amendments, Jonan said.
“I hope this year they are all completed.”