Government awards 12 coal contracts to local firms
JAKARTA (JP): Minister of Mines and Energy Kuntoro Mangkusubroto awarded on Monday 12 mining contracts to local investors to exploit coal resources in Central Kalimantan, East Kalimantan, South Kalimantan and South Sumatra provinces.
Kuntoro said the awarding of the contracts indicated local investors still believed in the prospects of the country's mining sector despite the current economic and political turmoil.
It also proves that local investors feel comfortable with the legal certainty provided by the current contract of work system, the minister said.
"I express my highest appreciation to the investors because their move could encourage other coal investors to invest in Indonesia," Kuntoro said.
The 12 contracts of work (COWs) are grouped in the third generation of coal contracts, the terms of which are based on Presidential Decree No. 75 of 1996.
The government categorizes coal contracts into different generations depending on the regulations they follow. Contracts which follow similar regulations are placed in the same generation.
First generation COWs, of which there are 11 contracts, were awarded in the 1980s and are based on Presidential Decree No. 49 of 1981.
Second generation COWs, covering 18 contracts, were awarded in the 1990s are based on Presidential Decree No. 21 of 1993.
In 1997, the government awarded 63 coal contracts under the third generation.
The three types of COWs have the same royalty rates but investors get different tax treatment.
The Ministry of Mines and Energy's director of coal Soedjoko Tirtosoekotjo said the 12 coal COWs approved on Monday included three contracts in East Kalimantan awarded to PT Bumi Laksana Perkasa, PT Dayalapan, PT Wadungmas Tambang Mulia; two contracts in Central Kalimantan awarded to PT Asmin Bara Bronang and PT Asmin Koalindo Tuhup; one contract for an area bordering Central Kalimantan and South Kalimantan awarded to PT Torah Antareja Mining.
PT Baramulti Suksesarana, PT Kadya Carakamulia, PT Sumber Kurnia Buana and PD Baramarta were each awarded contracts in South Kalimantan.
The remaining two contracts were awarded to PT Energi Batubara Sumatera and PT Pinangjaya Sarana Bara in South Sumatra.
Under the contracts, contractors have to hand over 13.5 percent of their output in cash on the basis of free on board or sale point prices.
They have to pay taxes to the government in accordance with the 1994 taxation law.
They also have to pay property tax and the same amount in dead rent. Ninety percent of the property tax is paid to the local administration.
Chairman and chief executive officer of the Swabara Group Greame Robertson announced that the group signed two contracts through its subsidiaries PT Asmin Bara Bronang and PT Asmin Koalindo Tuhup.
He said the group currently controls a coal contract area in Central Kalimantan, the contract for which was signed in 1997. The signing of the two new contracts brings the group's coal contract areas in Central Kalimantan to 137,000 hectares.
Swabara, which is controlled by local tycoon Hashim Djojohadikusumo and Soekanto Tanoto, started coal mining in 1988 and has become one of the country's largest coal mining groups, with output exceeding 12 million tons in 1998 from two mines in Kalimantan.
PT Adaro Indonesia, the largest of the group's coal mining operations, produces the well-known Envirocoal brand, which is considered one of the world's cleanest types of coal with a low sulfur and ash content.
Adaro's production is forecast to rise to 20 million tons per year by 2001, which will make it the largest coal producer in the country as well as one of the largest mines in the world. (jsk)