KONTAN.CO.ID – JAKARTA. Publish What You Pay (PWYP) Indonesia asks the Ministry of Energy and Mineral Resources (ESDM) to be aware of the increase in coal prices in 2018, which is believed to continue to soar. The price increase will push the rate of exploitation of coal on a large scale. Meanwhile, government supervision and compliance of business actors in several regions are still weak or need improvement.

PWYP Indonesia Mining Governance Researcher Rizky Ananda stated that business actors would take advantage of the momentum of rising prices to boost production. This opportunity is possible, primarily since the Ministry of Energy and Mineral Resources has targeted to increase production in 2018 by 5% from the 2017 Budget-Estimate Plan (RKAB), which is around 485 million tons.

This violates the 2015-2019 National Medium-Term Development Plan (RPJMN), which sets coal production at 406 million tonnes in 2018, and the National Energy General Plan (RUEN), which mandates a maximum production limit of 400 million tonnes in 2019.

“This further strengthens the direction of government policies that still place coal as a source of state revenue by continuing to raise coal production targets,” he said in a press release, Friday (2/2).

Meanwhile, on the other hand, coal governance still leaves serious problems that have not been appropriately resolved. There was 704 coal mining license that was still in non-clean and exact status as of December 2017. Overlapping mining and forest areas that have been identified since 2014 have not been resolved.

Data compiled by PWYP from the Ministry of Energy and Mineral Resources as of December 2016 shows that there are at least 631,000 hectares (ha) of coal concessions in protected forest areas and 212,000 ha of coal concessions in conservation forest areas. Business actors also lack compliance in placing reclamation and post-mining guarantee funds.

Until early 2018, the percentage of mining license holders who placed these funds was only 50% of the mineral and coal mining sector’s total license. No exception to the potential for state losses from illegal coal exports and license holders who do not pay taxes and other state revenue obligations.

“Continuing to increase the production target without making improvements in terms of supervision is the same as opening the tap for coal exploitation. Moreover, there is around 373 coal exploration license that expires in 2016-2017 (ESDM, December 2017) and is expected to enter the production phase in 2018, “said Rizky.

Coordinator of PWYP Indonesia, Maryati Abdullah, revealed that government policies in coal management still tend to be export-oriented. This can be seen from the decrease in compliance with the Domestic Market Obligation (DMO) in 2018 compared to 2017 as stipulated in the Decree of the Minister of Energy and Mineral Resources Number. 23 K / 30 / MEM / 2018.

As a result, the gradual decline in exports as mandated by the National Energy General Plan (RUEN) is increasingly difficult to realize. As a result, global market price trends have increasingly triggered coal exports, which could also impact supply shortages for domestic needs.

The deregulation of licenses stipulated in the Minister of Energy and Mineral Resources Regulation Number 34 of 2017 replaces Special Production Operations mining for Transportation and Sales with a Registration Certificate. “It is feared that easy access to obtaining a Registration Certificate as a prerequisite for carrying out transportation and sales activities is feared to have an impact on the potential for fraud and increasingly large violations,” said Maryati.

The Indonesia Corruption Watch (ICW) study shows the finding of potential state losses of Rp 133 trillion due to alleged unreported transactions from coal exports during the 2006-2016 period by looking at Indonesia’s data gap and importing countries. The Coordination and Supervision of Corruption Eradication Commission (KPK) revealed that Special production Operation (OPK) Mining License (IUP) holders often carry out transportation and sales activities from other parties not listed in the Special production Operation (OPK) Mining License (IUP) decree.

“The low compliance of business actors still overshadows the coal industry in Indonesia. An integrated system from the licensing, revenue to sales chain is needed to be used as a reference in monitoring the compliance of business actors’ obligations so that violations do not recur,” he concluded.