Indonesia’s Ministry of Energy and Natural Resources (ESDM) is drafting regulations that will grant a royalty exemption for coal producers entering the downstream coal sector. The rules were prepared following the signing of the omnibus job creation law that amends the country’s mining law. The ministry, however, has not revealed which downstream coal sectors are eligible for the royalty exemption.
According to Indonesia’s mining law, the coal downstream industry is broken down into four areas: coke manufacturing, coal gasification, coal liquefaction, and the use of coal to generate electricity that is connected to the national transmission grid to be used by the public. The ESDM and Indonesia’s finance ministry will handle the applications for the exemption to eliminate conflict of interests and ensure the government still receives revenues from the industry.
The Indonesian coal mining association (APBI) welcomed the drafting of the new regulations. APBI said it could help expand investment in the downstream coal industry. Previously, state-owned coal producer Bukit Asam signed an agreement with state-owned oil firm Pertamina on a joint venture coal gasification project. Under the deal, Bukit Asam has to deliver 1 million tons/year of methanol to Pertamina for two years.
