Government: Mining deals must be unaffected by autonomy law

Government: Mining deals must be unaffected by autonomy law

JAKARTA (JP): The Ministry of Mines and Energy has demanded
that the wider autonomy to be given to provincial administrations
should not affect existing mining contracts.

Soedjoko Tirtosoekotjo, the head of the coal directorate at
the ministry, said on Saturday that existing mining regulations
should be protected from being overruled by regional regulations.

"We need to make sure that the regions do not modify existing
contracts," Soedjoko told The Jakarta Post on the sidelines of
the Indonesian Mining Conference.

He said future mining investors would shy away from Indonesia
if present mining contracts were subjected to follow provincial
regulations.

Soedjoko said existing contracts clearly stated mining
companies' rights and obligations, and as such regions should not
impose new obligations on them.

The government has issued a number of laws as part of the
gradual transfer of its policy-making power to provincial
administrations.

Under Law No. 22/1999 on regional administration and Law No.
25/1999 on intergovernmental fiscal balance, regions will have
greater autonomy over managing their affairs.

The government plans to introduce autonomy next year and the
Ministry of Home Affairs is currently preparing a series of
regulations to support the implementation of laws.

Based on the draft regulation supporting the Autonomy Law, the
ministry will delegate a portion of its authority to provinces,
regencies and/or mayoralties.

Regions, for example, could issue mining permits on
exploration and production, including new forms of mining taxes.

The central government, however, will still regulate the use
of mineral resources and energy on a national scale, including
contractual terms and mining fees.

Soedjoko said the ministry had proposed the clause containing
the contract sanctuary in the regulation so that the existing
mining contracts would not be affected.

The central government also has to consider proposals from the
provinces, he added.

He said the regulation was due out next May, and his ministry
should have the final draft approved by then.

He said there were signs of local governments preparing bylaws
to gain additional revenue from present mining companies.

The Minahasa regency has been accused by gold mining company
PT Newmont Minahasa Raya of ignoring locally imposed tax
payments, which, according to the company, were outside its
contract of work (COW) signed in 1986.

The regency demanded Newmont pay Rp 19.357 billion (US$2.4
million) in overdue taxes from 1995 to 1998.

Soedjoko said locally issued mining regulations should be
applied only in future mining contracts.

However, he said local governments should allow the natural
resources they own to benefit the entire nation. (bkm)