The urgency of placing coal as a motor of development, not just a commodity, is understood by all parties. Nevertheless, in practice, it is not that easy. There are some obstacles, both from internal, namely in the imposition of state revenue on coal and externally, such as price volatility, which is entirely shaped by the global market. This was highlighted in a Public Discussion entitled “National Coal Management Strategy: Fiscal Challenges and Energy Transition” held by PWYP Indonesia in Jakarta (4/10).

Josaphat Rizal Pramana, Director of Energy, Mineral and Mining Resources, Ministry of National Development Planning, emphasized the government’s commitment to managing coal as development capital by limiting coal production and exports and prioritizing it for the domestic industry. “As outlined in the 2015-2019 National Medium-Term Development Plan (RPJMN), this will still be a content in future development plans,” said Rizal.

Meanwhile, in the current reality, coal is still treated as a pillar of state revenue to cover the deficit in the balance of payments and overcome the rupiah’s weakness due to global economic turmoil. Ironically, coal management cannot be separated from the problem of leakage of state revenue. No less important, considering the externalities of using coal, an energy transition to environmentally friendly and sustainable energy is urgent to do.

Leakage of State Revenue

Firdaus Ilyas, Coordinator of the Research Division of Indonesia Corruption Watch (ICW), conveyed ICW’s findings regarding discrepancies in coal production and export data, potentially cause trillions of state revenue loss. Not only that, but ICW also found that there were payments of “tactical money” outside of the financial obligations that the company paid to government agencies involved in the processing of coal exports. This certainly adds to the company’s operational costs and can reduce tax payments to the state, said Firdaus.

“We even found a discrepancy in the value of coal export sales between the BPK report and the company’s sales documents. The difference reached 1.4 million USD for only one company’s export transactions for two months from our sampling test. It could be that there was document falsification by unscrupulous people,” added Firdaus.

Weak supervision is suspected of opening up loopholes for leakage of state revenues, said Maryati Abdullah, the National Coordinator for Publish What You Pay (PWYP) Indonesia. “Supervision should ideally include traceability of coal commodities, including knowing the origin of the goods, who are the miners, who trade and where they are supplied. This is because the monitoring instruments used are based on company reporting. Coal companies can take advantage of loopholes in self-assessment based reporting systems without being followed by field verification by regulators,” said Maryati.

Merry Maryati, Director of Industry and Mining, Directorate General of Foreign Trade, Ministry of Trade, explained that surveyors are required to submit reports on the realization of coal exports to the portal in trade, as well as a written report on verification or technical surveillance activities as well as a recapitulation of the Surveyor Report each month.

Director of Non-Tax State Revenue (PNBP) of the Ministry of Finance Mariatul Aini assessed that the leakage of revenue was partly due to relying solely on surveyors to control coal. “To overcome this, it is necessary to verify the conformity of PNBP payments and create a single identity for each mining export transaction,” she added.

Responding to this, the Director of Coal Development and Business of the Ministry of Energy and Mineral Resources, Sri Raharjo, explained that to overcome the leakage of revenue, the government has developed e-PNBP. This system can also guarantee the accuracy of calculating the Non-Tax State Revenue (PNBP) paid by companies.

Future Transition of Energy in Indonesia

Ediar Usman, Head of the Energy Crisis Management Facilitation Division-National Energy Council, explained that it is essential for the government to be consistent with the National Energy Policy (KEN) and the National Energy General Plan (RUEN) to ensure a safe and sustainable energy supply for the community. This includes efforts to control coal production and export, leading to an energy transition to new and renewable energy (EBT).

Faced with the current reality of coal production, Ediar admits that it is challenging to limit production to a maximum of 400 million tons in 2019. The National Energy Council will increase its supervisory function to ensure the RUEN target’s achievement per year. Problems that arise, such as the unreached energy mix target, will be resolved together with other Ministries / Agencies.

“On the other hand, the development of EBT in Indonesia is actually increasing quite now by seeing the many potentials being discovered now and which have not been previously imagined. For example, Banyu power and geothermal power, “added Ediar Usman.

Lucky Lontoh, a representative from the International Institute for Sustainable Development (IISD), conveyed the diversity of factors driving the energy transition in coal-producing countries. “Germany is driven by a community movement. Meanwhile, in China, economic factors play an important role,” added Lucky.

The Director of Various New and Renewable Energy, Harris, explained that the energy transition to EBT would naturally occur when the price of electricity generated from EBT becomes more affordable and can compete with fossil energy. “With technological advances now and in the future, this is a necessity,” said Harris.

Chairman of the Indonesian Renewable Energy Society (METI), Surya Darma, emphasized that Indonesia is ready or not ready to switch to EBT. “A ‘strong government’ is needed for the implementation of an effective energy transition policy to be realized,” said Surya.