Proposed COW changes not final: Sudjana

Proposed COW changes not final: Sudjana

JAKARTA (JP): Minister of Mines and Energy I.B. Sudjana said
yesterday that the government's proposed changes to seventh
generation mining contracts of work (COW) were not yet final.

"The amendments are still being discussed at staff level,"
Sudjana was quoted by Antara as saying after a meeting of
economic ministers to prepare for the monthly cabinet session on
economic affairs tomorrow.

He said that since his staff had not yet given him a final
draft of the proposed changes he could not say how many shares
foreign mining contractors would have to give the government
under the new contracts.

The government's intention to change several principal terms
in seventh generation COWs was revealed when mining officials
summoned foreign contractors to a briefing last Tuesday.

The meeting was followed by another briefing session Thursday
of companies applying for coal mining contracts.

Contractors were reportedly given until today to respond to
the government's proposals which called for, among other things,
government equity of at least 10 percent and a share in capital
gains generated by public share offerings.

State Secretary/Minister Moerdiono, apparently in an attempt
to remove confusion over the proposals, said again last week that
the ruling that allowed wholly-owned foreign companies to operate
in the mining sector and other sectors of the economy would not
be changed.

Moerdiono said he did not know of any ruling that would make
it compulsory for foreign mining contractors to give an equity
stake to the government at the outset of commercial operations.

Director General of Mines Adjat Sudradjat also said last
Friday that the proposed changes covering 17 points in the
seventh generation COWs were not set.

"The proposed changes are negotiable," Sudrajat told reporters
again yesterday.

Most foreign companies were stunned by the government's move,
saying the proposed changes were entirely unacceptable as the
draft contracts were initialed last year.

Under mining sector licensing procedures, the mining minister
must consult the House on contracts before they are approved by
the President.

Discussions on the proposed COW amendments are expected to
dominate the working session with Sudjana and the House's
commission dealing with mining and industry today. (vin)