Report: The Management of Coal Permits in Korsup KPK released by PWYP Indonesia is present to summarize the journey of coal mining governance reform initiated by the Corruption Eradication Commission (KPK) through the Coordination and Superivision of the Mineral and Coal Sector (Korsup Minerba) which began in 2014-2017.

This report is expected to be a reference for stakeholders on the aspect of controlling permits, especially for the coal mining permit (IUP) scheme as well as its achievements. There are a number of important findings from this report which aim to unravel the mining sector’s tangled threads from 1999-2009. Following are a number of important findings summarized in this report.

  • The large number of mineral and coal permits is due to the asynchronous policies during the transition period from the era of centralism to regional autonomy (decentralization). That resulted in uncontrolled licensing rates. As a result, the number of permits increased sharply, from only 750 permits in 2001 to more than 10 thousand in 2010, of which 40% were coal IUPs with a total area of ​​16.2 million hectares (DG Minerba, 2013). While the area for the PKP2B permit regime covers an area of ​​1.95 million hectares (DG of Forest Planning, 2014).
  • Efforts by the central government to collect mine IUP data post-boom permits to be adjusted to the Law No. 4/2009 Minerba regime, one of which was carried out through the reconciliation mechanism in 2011 by categorizing licenses as Clean and Clear (CnC) and non-Clean and Clear (non-CnC). However, a process that did not work well resulting in reconciliation also failed to collect valid data. Rejection by a number of regions occurred because there was an assumption that the legal protection in determining CnC and non-CnC was unclear.
  • Korsup Minerba encourages the process of controlling permits directed at revoking / terminating licenses with non-CnC status. Korsup also spearheaded a verification (overlay) between mining permits and forest areas, so that control of permits was also directed by revocation of licenses located in conservation forest areas, and protected forests that did not operate underground (underground mining) – mandated by Law Number 41 / 1999 concerning Forestry.
  • Korsup Minerba KPK recommends a legal protection related to the regulation of permits followed by the presence of the Minister of Energy and Mineral Resources Regulation No. 43/2015 concerning Procedures for Evaluating IUP Control in the end of 2015 and becomes a reference for the IUP structuring process until 2017.
  • From 2014 to April 2017, 776 coal mining licenses were revoked / terminated by the relevant Regional Heads, (Regents and Governors), known to have been revoked by the majority of non-CnC and were still in the exploration stage.
    The extent of coal IUP revoked and terminated reached around 3.56 million hectares. So that the total area of ​​coal IUP after the Korsup Minerba KPK reached around 12.6 million hectares (based on data as of January 30, 2017).
  • The remaining coal IUPs until April 2017 reached 2966 IUPs, where 52% or 1561 IUPs were known to have expired in December 2016. For the remainder, as many as 1405 IUPs, the permit decree was still active, but as many as 217 licenses were still non-IUP status CnC. The regional government must immediately follow up on the regulation of these licenses.
  • For the use of forest areas for mining activities, 102 thousand hectares of PKP2B coal concessions are in conservation forests. While in the protected forest it reaches 123.8 thousand hectares. As for the IUP type concessions, there are 194.8 thousand hectares in conservation forest areas and 519.8 thousand hectares in protected forest areas. Thus, coal permits / concessions that still exist in conservation and protection forest areas cover an area of ​​almost 940.4 thousand hectares or 15% of the total area of ​​mineral and coal concessions in conservation and protection forest areas.
  • On a territorial basis, the distribution of coal concessions in conservation and protection forest areas throughout Indonesia is mostly in the regions of Papua, East Kalimantan, West Papua and Aceh.

PWYP Indonesia’s recommendations for the above findings:

  1. Immediately accelerate the follow-up to the control of coal concessions that are still problematic, both administratively, territorially, the problem of filing PMA, expiration, non-clear and clean status, as well as concessions in conservation forests and protected forests. The government must act firmly and consistently carry out revocation / termination, both at the central and regional levels. Permits that have been revoked are returned to the State Reserve Area (WPN) for regulation.
  2. Develop a synchronous and integrated mining permit database system between the Central-Regions. The database contains updated mining permit / contract concession information throughout Indonesia, which is a shared database platform and is used as a reference in making policies and decisions related to coal licensing / contracts both at the central and regional levels. This integrated platform is constantly updated, reconciled, and verified at all times and periodically, so that the information in it is always valid and updated.
  3. Accelerate completion of the one map platform at the Ministry of Energy and Mineral Resources (ESDM One Map) which aims to synchronize map data of existing permit / contract concession coordinates, support monitoring of mining activities and spatial-based performance analysis in the EMR sector, and prevent similar errors (spatial) such as overlapping issues in the future.
  4. Accelerating the development of an online state revenue system and integrated with databases and other services such as company databases, spatial data, production plan and budget data (RKAB), limited export permits (ET), surveyor data, as well as revenue, customs duty, and also Indonesia National Single Window (INSW). The system is connected and requires to each other, integrated, and becomes a reference in monitoring and overseeing the compliance of the fiscal obligations of business actors.
  5. Encourage the development of a beneficial ownership analysis of coal business actors, as well as developing sanctions in the form of a black list system for companies that are indicated to be non-compliant and have committed violations. This effort can be taken by intensifying coordination between the Directorate General of Mineral and Coal of ESDM and the Directorate General of General Law Administration (AHU) of the Ministry of Justice and Human Rights related to the legal register of coal companies.