Coal Business and Legal Provisions

Coal business and legal a new year is always in new hope for everyone, including the coal industry. The coal industry players also began to formulate strategies in conducting running a business, including mapping the obstacles and challenges.

Coal entrepreneurs predict that 2019, according to the Chinese lunar calendar, is the year of the land pig, will have several challenges. “There will be many challenges next year,” Chairman of the Indonesian Coal Mining Association (APBI) Pandu Patria Sjahrir told Katadata.co.id, Monday (31/12).

One of them is the policy of supplying coal to the domestic market (Domestic Market Obligation / DMO). This DMO is mandated by Law Number 4 of 2008 concerning Minerals and Coal. The content of the regulation states that the government can determine the policy to prioritize domestic minerals and coal.

Industry Determination

The government stipulates that 25% of coal producer production must be supplied domestically. Domestic industry will absorb coal.

However, not all coal produced by companies in this country is suitable for electricity generation. New business opportunities for power plants from state-owned companies can only process 4,200 calories of coal.

Violation and sanctions

That’s where problems arise. Moreover, the circular of the Minister of Energy and Mineral Resources Ignasius Jonan numbered 2841/30 / MEM.B / 18 dated June 8, 2018, mentions sanctions for cutting production quotas if the business entity does not meet the 25% obligation.

The government and entrepreneurs also had time to find ways to overcome it. One of them is the quota transfer. So, companies whose coal specifications are not suitable to buy coal from other companies.

Quota Transfer

The entrepreneur proposes that there is no need for a quota transfer. Thus, companies whose production is not suitable directly pay a sum of money to the government, thereby increasing Non-Tax State Revenues. “There should be no need to transfer quotas, pay directly to the government,” said Pandu.

The Director-General of Minerals and Coal of the Ministry of Energy and Mineral Resources (ESDM) Bambang Gatot Ariyono acknowledged that there are several companies which until now, have not fulfilled the DMO obligations. Sanctions, reduction of production quotas in 2019.

However, he has not confirmed the amount of production quota reduction because it is still in the process of evaluating the Work Plan and Budget (RKAB). “There are approximately ten companies,” Bambang said.