Indonesia is the fifth largest coal producer in the world after China, the United States, Australia and India. However, Indonesia is the second largest exporter after Australia with export value reaching 12.9 billion USD in 2016 (WTEx, 2018). Even though Indonesia’s coal reserves are ranked ninth largest in the world, which is only 2.2% of the world’s coal reserves (BP Statistical Review 2016). The majority of Indonesia’s coal reserves are scattered in the regions of Kalimantan and Sumatra with reserves of 18,882 and 13,380 million tons respectively (Geology Agency, 2016). By using a fixed production rate (461 million tons per year-realization of production in 2016) and no addition of new reserve data, Indonesia’s coal reserves are estimated to be exhausted within the next 28 years, or to be precise until 2046.
Meanwhile, coal management in Indonesia is still overshadowed by a number of critical issues, ranging from the chaotic licensing to indications of state losses due to illegal exports and unrecorded transactions. Regarding permits, there are at least 633 IUPs with non-clean and clear status (MEMR, January 2018) and 843,000 ha of coal concessions located in protected and conservation forest areas (MEMR, December 2016). Moreover, until early 2018, the percentage of IUP holders who placed reclamation and post-mining guarantee funds was only 50% of the total IUP in the mining sector.
The Indonesian government has launched a coal production and export control policy for the past three years. This is stated in Presidential Regulation (Perpres) No. 2 of 2015 concerning the National Medium-Term Development Plan (RPJMN) for 2015-2019 and again emphasized in Perpres No. 22 of 2017 concerning the National Energy General Plan (RUEN). Through the above regulation, the Government of Indonesia is committed to gradually reducing coal production to 400 million tons in 2019 and gradually reducing the portion of coal exports and stopping exports no later than 2046.
Publish What You Pay (PWYP) Indonesia, with the support of the European Climate Foundation, has initiated a program that aims to improve coal governance in Indonesia by creating governance with integrity, transparency and accountability. This is intended to ensure that coal revenues are used responsibly and in harmony with the principles of sustainable development, closing the gaps of corruption in order to control rent potentials and control exploitation and socio-environmental impacts.
This program specifically focuses on the coal licensing, revenue, production and trade chain. The approach taken in this program includes 1) Multi-stakeholder engagement in improving coal governance, 2) Fact-based policy advocacy through the preparation of coal permit structuring studies, mapping of gaps in production and export supervision, and effectiveness of governance managing state revenue from the coal sector, 3) Increasing public awareness through creative campaigns.
The program emphasizes collaborative work with the Corruption Eradication Commission (KPK), Ministries and Institutions (K/L) and related local governments through the Coordination and Supervision initiative in the mineral and coal sector (Korsup Minerba), primarily in overseeing the implementation of policies and company compliance in the chain coal permit, production and export value.
In a broader context, this program is a tangible manifestation of PWYP Indonesia’s commitment in encouraging the realization of the energy transition in Indonesia by increasing the contribution of renewable energy in the primary energy mix, which is 31% in 2050, through limiting coal production, use and export as mandated by RUEN.