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

This report is expected to reference stakeholders on aspects of permit control, especially for the coal Mining License (IUP) scheme and its achievements. There are several significant findings from this Report which aim to untangle the tangled threads of mineral and coal governance from 1999-2009. The following are some of the essential findings summarized in this Report.

  • The mining and coal licensing boom occurred due to the unsynchronized policies during the transition period from centralism to regional autonomy (decentralization). It resulted in uncontrolled licensing numbers. 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 mining license with a total area of ​​16.2 million hectares (Directorate-General Coal and Mineral, Ministry of Energy and Mineral Resources, 2013). Simultaneously, the Coal Contract of Work (PKP2B) permit regime covers an area of ​​around 1.95 million hectares (Directorate General of Planning, 2014).
  • One of the central government’s efforts to collect mining license (IUP) data after booming permits to comply with the Coal and Mineral Act No. 4/2009 was carried out through a reconciliation mechanism in 2011 by categorizing permits into Clean and Clear (CnC) and non-Clean and Clear (non-CNC). However, the process that did not run well resulted in the reconciliation of failing to collect valid data. The rejection by several regions occurred because there was an opinion that the legal umbrella in determining CnC and non-CnC was unclear.
  • Coordination and Supervision of the Mineral and Coal Sector (Korsup Minerba) Corruption Eradication Commission (KPK) encourage the licensing control process, directed at the revocation/termination of non-CnC licenses. Coordination and Supervision of the Mineral and Coal Sector (Korsup Minerba), Corruption Eradication Commission (KPK) have also pioneered the implementation of verification (overlay) between mining permits and forest areas. So, that license control is directed at revoking or withdrawing mining licenses in conservation forest areas and protected forests that do not operate underground (underground mining) – the mandate of Law Number 41 / 1999 on Forestry.
  • Coordination and Supervision of the Mineral and Coal Sector (Korsup Minerba) Corruption Eradication Commission (KPK) recommend the existence of a legal umbrella related to permitting control, which will be followed up by the presence of Minister of Energy and Mineral Resources Regulation Number 43/2015 concerning Procedures for Evaluating Mining License (IUP) Control at the end of 2015 and becomes a reference for the mining license (IUP) structuring process until 2017.
  • From 2014 to April 2017, it was recorded that 776 coal mining permits were revoked/terminated by the authorized Regional Heads (Regent and Governor). It is known that the majority of licenses revoked are non-CnC status and are still in the exploration stage.
  • The area of ​​the revoked and terminated coal mining license (IUPs) reached around 3.56 million hectares. The total area of ​​coal mining license IUP after the existence of Coordination and Supervision of the Mineral and Coal Sector (Korsup Minerba) Corruption Eradication Commission (KPK) reaches around 12.6 million hectares (based on data as of January 30, 2017).
  • The remaining Coal Mining License IUPs until April 2017 reached 2966 licenses, of which 52% or 1561 licenses are known to have expired in December 2016. For the rest, namely as many as 1405 Mining licenses, the SK permits are still active, but as many as 217 licenses still have non-CNC status. Local governments must immediately follow up on curbing these licenses.
  • For forest areas for mining activities, 102 thousand hectares of Coal Contract of Work (PKP2B) type coal concessions are located in conservation forests. Meanwhile, those in protected forests reached 123.8 thousand hectares. Meanwhile, for mining license 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 in conservation and protected forest areas cover almost 940.4 thousand hectares or 15% of all mineral and coal concession areas in conservation and protected forest areas.
  • Regionally, the distribution of coal concessions in conservation and protected forest areas throughout Indonesia is mostly in Papua, East Kalimantan, West Papua, and Aceh.

PWYP Indonesia recommendation for the above findings:

  1. Immediately accelerate the follow-up of control for coal concessions that are still problematic, both administratively, regionally, with problems applying for Foreign Investment (PMA), expiry of their validity period, with the status of Non-Clear and Clean, as well as concessions located in conservation and protected forests. The government must be firm and consistent in carrying out revocation/termination at the central and regional levels. Permits that have been revoked are returned to the State Reserved Area (WPN) to make a regulation.
  2. Build and develop a mining licensing database system that is synchronous and integrated between the Central-Regions. The database contains updated mining concession/contract information throughout Indonesia, which becomes a shared database platform and is used to reference policy making and decisions regarding coal licensing/contracts at the central and regional levels. This integrated platform is continuously updated, reconciled, and verified every time and periodically so that the information in it is always valid and updated.
  3. Accelerate the completion of the one map platform at the Ministry of Energy and Mineral Resources (ESDM One Map), which aims to synchronize map data coordinates of existing concessions/contracts, support monitoring of mining activities, and spatial-based performance analysis in the Energy and Mineral Resource sector, and prevent similar (spatial) errors such as overlapping issues in the future.
  4. Accelerate the development of an online state revenue system that is 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 hospitality and customs as well as the Indonesia National Single Window (INSW). These systems are mutually connected, require each other, and are integrated and referenced to monitor and supervise compliance with business actors’ fiscal obligations.
  5. Encouraging the development of beneficial ownership analysis of coal business actors and developing sanctions in the form of a blacklist system for companies indicated to be non-compliant and have committed violations. This effort can be pursued by conducting intense coordination between the Directorate General of Mineral and Coal and Energy and Mineral Resources with the Directorate General of General Legal Administration (AHU) of the Ministry of Law and Human Rights regarding the legal register of coal companies.