70:30 Profit-Sharing Scheme for State and Mining Companies? Here is the Ministry of Energy's Response
The Ministry of Energy and Mineral Resources (ESDM) has addressed circulating reports regarding the potential adoption of an oil and gas upstream profit-sharing scheme within the mineral and coal mining sector. Recent rumours suggest the government is considering a scheme where the state receives 70% of the revenue, leaving 30% for mining companies.
Deputy Minister of Energy and Mineral Resources, Yuliot Tanjung, explained that the proposed 70:30 profit-sharing scheme is currently in the study phase within the Directorate General of Mineral and Coal. He emphasised that the government must conduct thorough calculations to ensure that any such policy provides both state revenue and certainty for business operators.
“It is still under discussion. It is being reviewed by the Directorate General of Mineral and Coal. This is based on technical and economic studies, while also considering state revenue,” he explained when met at the Ministry of Energy’s office in Jakarta on Friday.
The government believes there is a need to accelerate the creation of regulations to serve as a legal umbrella for the national mining industry. Yuliot noted that a final decision regarding changes to the mining contract system cannot be made unilaterally.
“Looking at our targets, we are accelerating this to ensure security, legal certainty, and business certainty for operators. This will be discussed in the Cabinet meeting. Therefore, the final decision rests with the Cabinet,” Yuliot continued.
Previously, the Director General of Mineral and Coal, Tri Winarno, also responded to reports that a ‘gross split’ scheme might be set at a 70:30 ratio. While not providing specific details, he noted that the government is evaluating all possible schemes.
“The evaluation covers all possibilities. It is not limited specifically to that 70:30 ratio,” he stated when met at the DPR RI Building on Thursday.
As of now, no final decision has been reached regarding the plan. Tri explained that his department is continuing to evaluate mining governance, including Mining Business Licences (IUP) and other related matters.
“What is clear is that regarding IUP and others, we will conduct evaluations. Essentially, we are checking whether state revenue shares are in accordance with Article 33 of the Constitution,” he concluded.