IMA deems cancellation of production sharing scheme for mining sector appropriate
The Indonesian Mining Association (IMA) considers the government’s decision to cancel the planned implementation of the oil and gas revenue-sharing scheme for the mineral and coal (minerba) sector to be highly appropriate and crucial.
“The mineral and coal mining industry possesses unique characteristics with varying levels of complexity for each commodity. These fundamental differences are why many countries apply royalty and fiscal systems that differ from the oil and gas sector,” stated IMA Executive Director Sari Esayanti in an official statement from Jakarta.
According to Esayanti, the government’s decision is critical to eliminating issues and plans that could potentially disrupt investment. Through this cancellation, she hopes the government can achieve stability in fiscal policy and corporate financial obligations, ensuring the sustainability of investment and mining industry operations.
This stability is urgently needed as the mining industry currently faces various policy adjustments and new operational challenges, including the implementation of single-door export regulations, export proceeds (DHE), adjustments to royalties and Mineral Reference Prices (HPM), export duties, and the mandatory implementation of B50 biodiesel.
The IMA emphasised that certainty and consistency in government policy are the primary keys to maintaining the competitiveness of Indonesia’s mining industry. “This is particularly important amidst the increasing need for long-term investment to support the national downstreaming and energy transition agendas,” added Esayanti.
The Minister of Energy and Mineral Resources (ESDM), Bahlil Lahadalia, reaffirmed that there will be no changes to the revenue-sharing scheme for the mineral and coal sector. “There are no changes at all in the minerba sector. It is important that I state this to provide clarification that existing regulations remain unchanged. Permanently,” Bahlability stated during a press conference at the Parliament Complex in Senayan, Jakarta.
Bahlil decided that the gross split scheme will only apply to the oil and gas sector and will not be applied to the mineral and coal sector. This determination, Bahlil noted, is permanent. “The system within the Ministry of Energy and Mineral Resources adheres to the principle that gross split is only applicable to the oil and gas sector,” said Bahlil.