Govt drops planned changes to mining COWs<\/p>\n
JAKARTA (JP): The Ministry of Mines and Energy has canceled
\nits planned changes to new mining contracts of work (COW) which,
\namong other things, would have obliged contractors to give the
\nstate 10 percent of their mining ventures.<\/p>\n
Director General of Mining Adjat Sudradjat announced yesterday
\nthe withdrawal of the plan at a meeting with representatives of
\naround 60 of the mining companies that have applied for seventh-
\ngeneration COWs and third generation coal contracts.<\/p>\n
\"Adjat promised at the meeting that the government would
\ncomplete the processing of the COWs by September,\" M. Simatupang,
\nvice president of the Indonesian Mining Association (IMA) told
\nThe Jakarta Post yesterday.<\/p>\n
\"To my understanding, Adjat meant that contracts would be
\napproved by the President by that month,\" Simatupang said.<\/p>\n
Adjat was quoted by Reuters as saying yesterday that \"We will
\nnow go back to the COWs that were initialed (last year).\"<\/p>\n
Adjat said the 176 mineral contracts of the seventh generation
\nand 15 coal contracts of the third generation would soon be sent
\nto the House of Representatives for formal approval.<\/p>\n
COWs have to be discussed and approved by the House and the
\nInvestment Coordinating Board before they are sent to the
\nPresident for final approval.<\/p>\n
Adjat said last week and early this week that the ministry
\nproposed that 191 contracts, which were initialed by mining
\nofficials and contractors in Sept. 1996, be amended to further
\nnational interests.<\/p>\n
Mining officials said they had asked for 16 points of change
\nin the new COWs which included an obligation to give the state
\n(government) at least a 10 percent equity stake and the right to
\nshare in capital gains generated by any share issuance overseas.<\/p>\n
Foreign companies adamantly rejected any changes to their
\ndraft contracts because they had been negotiated with and
\napproved by former director general of mining Kuntoro
\nMangkusubroto.<\/p>\n
Kuntoro was stripped of his authority to initial draft COWs by
\nMinister of Mines and Energy I. B. Sudjana in October, 1996, one
\nmonth after initialing the seventh generation COWs, and was
\nreplaced by Adjat in April.<\/p>\n
Foreign investors expected only minor changes would be made to
\ntheir draft contracts when officials took them to the House and
\nthe Investment Coordinating Board.<\/p>\n
The contractors were given by the ministry until early this
\nweek to say whether they were for or against the proposed
\nchanges.<\/p>\n
\"They said it would be difficult to implement. Almost all of
\nthem were not in favor for practical reasons,\" he said.<\/p>\n
The plan has drawn criticism from various parties, including
\nanalysts, consultants and the Association of Indonesian Mining
\nProfessionals (Perhapi).<\/p>\n
They suggested the government introduce the changes to the
\nnext generation of COWs.<\/p>\n
Perhapi Chairman Herman Afif Kusumo said yesterday the
\ngovernment's decision to cancel the planned changes to the COWs
\nwould be a boon to the reputation of the Indonesian mining
\nindustry.<\/p>\n
\"Indonesia would be commended for being consistent with its
\nregulations,\" Herman told the Post.<\/p>\n
\"We feel relieved now. With the withdrawal of the planned
\nchanges, the Indonesian mining world will be calm again,\" Herman
\nsaid. (jsk)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-drops-planned-changes-to-mining-cows-1447893297",
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"sponsor": "Okusi Associates",
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