A notification letter changed the lives of 1,900 families. PT Gunbuster Nickel Industry (GNI), a giant nickel smelter in North Morowali, has begun gradually laying off nearly one-third of its workers. The reason is the company’s financial condition, which has yet to improve. In the same region, only a few weeks earlier, a Ministerial Decree quietly confirmed that North Morowali, one of the few hearts of Indonesia’s national nickel downstreaming industry, is not a “processing region.”
Two events, one bitter conclusion. The regions that sustain the ambition of Indonesia’s “green transition” are instead being left alone when the storm comes.
Nickel is sold to the world as Indonesia’s “golden ticket” to a low-carbon future. But ask the workers who have been laid off, the owners of food stalls and boarding houses around industrial areas that are now quiet, and the residents who breathe the smoke from the captive coal-fired power plants that drive the smelters every day. Where is the “green” in this? Without safeguards, the energy transition merely moves old injustices into a new outfit.
The most decisive question is one that is rarely asked. When a smelter shuts down or sends thousands of workers home, where will local governments get the money to finance mitigation? Retraining, social safety nets, and local economic diversification all require no small amount of funding.
This is where the root of the problem lies: our natural resource (SDA) producing regions are systematically not equipped with sufficient fiscal capacity to finance their own transitions.
Let us follow the money. This year, the state has set a national royalty target from minerals and coal of nearly IDR 84 trillion. Morowali and North Morowali alone are targeted to contribute more than IDR 2 trillion, a huge figure. Yet Ministry of Energy and Mineral Resources (ESDM) Ministerial Decree No. 157 of 2026 concerning the Designation of Mineral and Coal (Minerba) Producing and Processing Regions for 2026 does not include either of them as “processing regions.” Even though this category was created precisely to compensate regions that bear the negative externalities. Dozens of smelters operate and four National Strategic Projects (PSN) stand there, but under the fiscal formula, it is considered as if no processing activity exists there. A methodology that revolves around the narrow criterion of “integrated facilities” means that the regions bearing the greatest ecological burden are instead excluded from the list of those entitled to receive their rights.
The potential leakage does not stop at the issue of designation. Take the case of Amman Mineral in West Nusa Tenggara (NTB) some time ago. Article 129 of the Mineral and Coal Mining Law (Minerba Law) explicitly grants regions a 6 percent share of the company’s net profit. It is a right, not charity. At the time, findings by the Audit Board of Indonesia (BPK) showed that this share had not fully reached the regional treasury for years. This was not simply because the company allegedly delayed payment due to the absence of implementing regulations, for example, but also because the region had no instruments to verify it. The term “net profit” contains a Batman trap. It can easily be narrowed through transfer pricing schemes and the allocation of costs to affiliated entities. The NTB provincial government even had to send a letter requesting an independent audit because it doubted the figures submitted. A region will never be able to claim what it cannot read.
Even when the revenue-sharing formula has been calculated correctly and the right has been successfully claimed, the money can still disappear along the way. In North Maluku, a province celebrated for its nickel wealth, transfers to the region were cut by hundreds of billions of rupiah this year, most of which came from Revenue Sharing Funds (DBH). The impact directly hit people. Employee allowances were cut and thousands of honorary workers were threatened with dismissal. A resource-rich region, yet its employees are not fully paid. This is the most blatant face of the resource curse.
The common thread from all these problems is only one. Our natural resource fiscal regime only measures the money received, not the damage. DBH is calculated based on how much revenue enters the central government treasury, not on how large the social and ecological costs are that must be borne by the regions. It divides money, but does not divide the burden and value. Law No. 1 of 2022 on Financial Relations between the Central Government and Regional Governments (HKPD) has indeed begun to recognize affected regions, but only as a patch, not as the main logic. As long as the price of resources never takes environmental damage into account, the “pie” being divided will always be far cheaper than the actual cost of restoration. And as long as the extraction of non-renewable resources is treated as routine revenue, rather than savings for future generations, we are essentially consuming capital while pretending to call it income.
Therefore, the debate must shift. No longer merely “how to secure the money,” but “what should this money be optimized for.” The answer is firm: for a just transition and the long-term sustainability of the regions. This requires reform, not resignation. We too often assume that regulations that have already been enacted are an unchangeable fate. In fact, this Ministerial Decree can be corrected, the revenue-sharing formula can be revised, and social and environmental externalities must be included in fiscal calculations.
A glimmer of hope is beginning to emerge. A number of members of Regional House of Representatives (DPRD) from different regions are now consolidating through the Regional Green Parliament Caucus. They have begun demanding a transparent revenue-sharing methodology and encouraging regional fiscal policies that side with communities on the ground. They are the holders of political mandates in the regions, through their legislative, budgeting, and oversight functions.
Indonesia’s energy transition is being built on the land and sweat of resource-producing regions. If we allow them to bear the damage without being equipped with the fiscal capacity to recover from it, then what we call “green” will only be a new coat of paint for old injustice. Follow the money. It will show us honestly who has been paying the high price, and who has never truly shared it.
Read the full article at beritabaru.co.