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Ada Pertanyaan? Hubungi Kami Ari Pramuditya, Kartini L Makmur
Mining site. Photo by: ADY
The government is set to issue a revision to Government Regulation No. 77 of 2014on the Third Amendment of Regulation No. 23 of 2010 on the Implementation of Mineral and Coal Business Activities (“Revision”). The Revision is a part of the government’s current series of economic-policy packages, as they relate to the energy sector. TheRevision will supposedly alter the provision relating to contract-renewal times.
The government is planning to offer businessmen a little leeway in terms of contract-extension applications through the new Revision. Bambang Gatot, acting as Director General for Minerals and Coal at the Ministry of Energy and Mineral Resources, has stated that the proposed Revision will allow for contract extensions to be applied for long before a contract actually expires.
In accordance with Government Regulation No. 77 of 2014, holders of a Contract of Work (Kontrak Karya – “KK”), as well as a Coal-Mining Agreement (Perjanjian Karya Pengusahaan Pertambangan Batubara – “PKP2B”) may currently apply for a contract extension two years before their contract expires. However, the draft Revision proposes that this be extended to a full ten years before a contract’s expiration date.
According to Mr. Gatot, the proposed ten-year period set out in the Revision is based on detailed data and research. The thinking behind the move is that there will not be enough legal certainty if any regulation relating to this matter only allows for an extension to be processed two years prior to a contract’s expiration date. Such legal certainly is vital, however, as mining-company investments can be immense.
Mr. Gatot further stated that companies will first have to meet two requirements in order to be considered eligible to apply for contract extensions ten years prior to their expiration dates. Firstly, a metallic mineral company looking to secure such an early extension should possess major investment value and be considered high risk.
“If the mining regulation is successfully revised, then mining companies which are already in possession of a KK will be assessed based on their investment values,” explained Mr. Gatot on Monday, 2 November 2015.
In addition to altering the contract-extension application period, the Revision will also deal with matters of divestment. Currently there are no clear rules and directions regarding any divestment mechanism, thus Mr. Gatot believes that more specific rules are necessary.
“Hitherto, there have been no technical rules on the implementation of divestment, which has led to confusion in some cases,” Mr. Gatot stated.
Currently, a provision only exists which regulates the divestment obligations of foreign mining companies which have already been operating for a period of five years under Government Regulation No. 23 of 2010. Furthermore, the amount of divestment was also set out in Article 97 of Government Regulation No. 23 of 2010. However, no specific provision currently exists regarding exactly how any divestment is to be implemented.
A detailed provision regarding the divestment mechanism will thus be set out in the Minister of Energy and Mineral Resources regulation. Moreover, this regulation will also set out what should occur in the case of any divestment share not being taken up by the government. According to Mr. Gatot, it is important that these matters are specifically regulated and have a clear legal basis.
The proposed Revision has already been submitted to the Coordinating Ministry for Economic Affairs, and it is hoped that it will be ready this month. This provisional timeframe is dependent however on the results of deliberations which are currently taking place at a ministerial level.
Mr. Gatot also wished to stress that the proposed Revision to the timeframe for contract extensions and to divestment mechanisms was not specifically related to any of the huge mining companies currently working in Indonesia. Gatot asserted that these steps were not being taken with the intention of placating PT Freeport Indonesia, which some have alleged, and instead emphasized that the Revision will apply to all mining companies across the board.
“The Revision is not intended to simply please Freeport,” Mr. Gatot asserted emphatically.
Current development showed that the plan to execute the Revision is postponed by the government.
(sp)
Ari Pramuditya, Kartini L Makmur
Mining site. Photo by: ADY
The government is set to issue a revision to Government Regulation No. 77 of 2014on the Third Amendment of Regulation No. 23 of 2010 on the Implementation of Mineral and Coal Business Activities (“Revision”). The Revision is a part of the government’s current series of economic-policy packages, as they relate to the energy sector. TheRevision will supposedly alter the provision relating to contract-renewal times.
The government is planning to offer businessmen a little leeway in terms of contract-extension applications through the new Revision. Bambang Gatot, acting as Director General for Minerals and Coal at the Ministry of Energy and Mineral Resources, has stated that the proposed Revision will allow for contract extensions to be applied for long before a contract actually expires.
In accordance with Government Regulation No. 77 of 2014, holders of a Contract of Work (Kontrak Karya – “KK”), as well as a Coal-Mining Agreement (Perjanjian Karya Pengusahaan Pertambangan Batubara – “PKP2B”) may currently apply for a contract extension two years before their contract expires. However, the draft Revision proposes that this be extended to a full ten years before a contract’s expiration date.
According to Mr. Gatot, the proposed ten-year period set out in the Revision is based on detailed data and research. The thinking behind the move is that there will not be enough legal certainty if any regulation relating to this matter only allows for an extension to be processed two years prior to a contract’s expiration date. Such legal certainly is vital, however, as mining-company investments can be immense.
Mr. Gatot further stated that companies will first have to meet two requirements in order to be considered eligible to apply for contract extensions ten years prior to their expiration dates. Firstly, a metallic mineral company looking to secure such an early extension should possess major investment value and be considered high risk.
“If the mining regulation is successfully revised, then mining companies which are already in possession of a KK will be assessed based on their investment values,” explained Mr. Gatot on Monday, 2 November 2015.
In addition to altering the contract-extension application period, the Revision will also deal with matters of divestment. Currently there are no clear rules and directions regarding any divestment mechanism, thus Mr. Gatot believes that more specific rules are necessary.
“Hitherto, there have been no technical rules on the implementation of divestment, which has led to confusion in some cases,” Mr. Gatot stated.
Currently, a provision only exists which regulates the divestment obligations of foreign mining companies which have already been operating for a period of five years under Government Regulation No. 23 of 2010. Furthermore, the amount of divestment was also set out in Article 97 of Government Regulation No. 23 of 2010. However, no specific provision currently exists regarding exactly how any divestment is to be implemented.
A detailed provision regarding the divestment mechanism will thus be set out in the Minister of Energy and Mineral Resources regulation. Moreover, this regulation will also set out what should occur in the case of any divestment share not being taken up by the government. According to Mr. Gatot, it is important that these matters are specifically regulated and have a clear legal basis.
The proposed Revision has already been submitted to the Coordinating Ministry for Economic Affairs, and it is hoped that it will be ready this month. This provisional timeframe is dependent however on the results of deliberations which are currently taking place at a ministerial level.
Mr. Gatot also wished to stress that the proposed Revision to the timeframe for contract extensions and to divestment mechanisms was not specifically related to any of the huge mining companies currently working in Indonesia. Gatot asserted that these steps were not being taken with the intention of placating PT Freeport Indonesia, which some have alleged, and instead emphasized that the Revision will apply to all mining companies across the board.
“The Revision is not intended to simply please Freeport,” Mr. Gatot asserted emphatically.
Current development showed that the plan to execute the Revision is postponed by the government.
(sp)