House members again urge changes to COWs<\/p>\n
JAKARTA (JP): House members have again raised the
\ncontroversial issue of the need for the government to have a
\nstake in mining companies.<\/p>\n
Legislators Iskandar Mandji of the dominant Golkar party and
\nAmru Al Mu'tasyim of the United Development Party (PPP) hinted
\nlast week that House members would make changes to the seventh
\ngeneration contracts of work (COWs) to give the government a
\nstake in new mining companies.<\/p>\n
"Honestly speaking, for the moment, I want a change in the
\ncontents of the (seventh generation) COWs as to give more
\nbenefits to the state," said Mandji at a hearing between the
\nMinistry of Mines and Energy and House Commission VI early last
\nweek.<\/p>\n
They said the government would have more benefits and more
\ncontrol over mining ventures if it had a stake in them.<\/p>\n
A heated controversy arouse last month after the Ministry of
\nMines and Energy moved to add 16 points to contracts awarded to
\n164 foreign and local mining companies in September last year.<\/p>\n
Two points especially drew strong reactions from mining
\ncompanies. One was related to the demand that contractors give
\nthe government a free 10 percent share before mining even
\nstarted. The second was the right for the government to share
\ncapital gains from overseas share issuances.<\/p>\n
The ministry, however, dropped its demands and left the
\ncontracts as they were as criticism grew.<\/p>\n
Minister of Mines and Energy I.B. Sudjana delivered the 164
\nseventh generation COWs to the House during the hearing.<\/p>\n
The COWs are subject to House endorsement before being taken
\nto the President for final approval.<\/p>\n
Mandji noted that the ministry's recent proposal to change
\nseventh generation COWs to allow the government a 10 percent
\nstake in mining projects was in line with the House's request.<\/p>\n
"The proposal is actually the House's. What the minister (I.B.
\nSudjana) was proposing was our aspirations," he said.<\/p>\n
Mining experts, including former senior officials of the
\nMinistry of Mining and Energy, also questioned the ministry's
\nmove to revise the contracts because all contract terms had been
\napproved both by the ministry and the contractors.<\/p>\n
They said the government should have applied the new rules to
\nthe next generation COWs and left the seventh generation COWs as
\nthey were.<\/p>\n
Mandji wants the changes added to the seventh generation COWs.<\/p>\n
A clause allocating the government a stake in appointed mining
\ncompanies should be added to the COWs, he said, adding that the
\ngovernment could appoint state-owned companies to acquire a
\nstake.<\/p>\n
Amru supported Mandji's view but insisted the government or
\nstate-owned companies should not be given a free stake.<\/p>\n
"The government or state-owned companies should buy the
\nshares. It's no longer the time to get shares for free." he said.<\/p>\n
According to the existing law, foreign companies are required
\nto divest a portion of their shares to local companies after 10
\nyears of operation.<\/p>\n
Mandji acknowledged that before they gave recommendations on
\nthe contracts, House members previously had not carefully studied
\nCOWs.<\/p>\n
House members should, therefore, be more careful in studying
\nthe seventh generation COWs in order to prevent scams like the
\nBusang case.<\/p>\n
"I don't want the people to curse the House of Representatives
\nfor giving wrong recommendations, as in the case of Busang
\n(mining project)," he added.<\/p>\n
The government was widely criticized for its weak position in
\nthe Busang mine contracts, with critics saying the government
\nshould have at least a 10 percent stake in the Busang mine.<\/p>\n
After months of maneuvers, the government was able to get a 10
\npercent stake in the mine.<\/p>\n
The Busang gold field in East Kalimantan was touted by its
\nfounder, Canadian firm Bre-X Minerals, to be the biggest gold
\nfind of the century with a total gold reserve of more 70 million
\nounces.<\/p>\n
But Independent analyst Stratchona Mineral Services Ltd later
\nannounced the Busang area contained only traces of gold, saying
\nBre-X had tampered with the core samples taken from the area.
\n(jsk)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/house-members-again-urge-changes-to-cows-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}