East Kalimantan Government weighs up increase in the Development and Community Empowerment Fund for coal mining firms

The East Kalimantan provincial government is evaluating a phased increase in the Development and Community Empowerment Fund (PPM) from Rp1,000 per metric tonne to Rp3,000–Rp5,000 per tonne, in cooperation with Mulawarman University to optimise community empowerment around mining operations.

’ Kajian kenaikan ini telah kami lakukan bersama Universitas Mulawarman karena nominal Rp1,000 yang berlaku hampir 10 tahun sudah tidak cukup mengangkat pemberdayaan masyarakat secara optimal,’ said Bambang Arwanto, head of the Energy and Mineral Resources Office (ESDM) of East Kalimantan, in Samarinda.

Bambang explained that the study on increasing social contributions involves active participation from community stakeholders, company management, and the government. ‘This policy will, of course, represent a new expense for mining companies, so its implementation must be discussed gradually and with great care.’

The initial outreach regarding the proposed rise in social funds has been conducted by the government in Jakarta. Further steps will be discussed more specifically and in depth based on company clusters, namely holders of IUPK licences.

Based on the technical study results, the government proposed a gradual increase in the range of Rp3,000 to Rp5,000 per metric tonne. ‘The proposed figure is driven by the coal price situation that surged due to geopolitical factors of war,’ said Bambang.

From the perspective of Muslim Gunawan, Chairman of the Kaltim PPM Forum, an ideal level that would not overly burden their operations at present is around Rp1,200 per metric tonne. ‘The process of adjusting the PPM rate is expected to take longer due to price corrections arising from reduced demand for coal from abroad,’ he said.

The global market is currently weak, impacting mining firms’ Plans and Budgets (RKAB) by an average 40 to 80 per cent cuts.

Despite various market dynamics and companies’ economic challenges, the government confirms that the process of reviewing the PPM increase will continue.