No Objection To The Coal Royalty Increase, APBI: Hopefully It's Still Within The Company's Capability

Illustration. (Photo: Doc. Antara)

JAKARTA - The government's plan to increase the coal royalty rate received a positive response from the Chairman of the Indonesian Coal Mining Association (APBI) Hendra Sinadia.

He revealed that his party understands the government's desire to increase state revenue for IUPK OP ex-PKP2B Business Permit holders and does not mind if the government increases the royalty rate.

"Because that's also the mandate of the Minerba Law. But the tariff increase should still be within the company's capacity, for which we need to look at the outlook for the coal business and the challenges are getting tougher," he told VOI, Thursday, March 10.

He also asked the government to consider the obstacles that will be faced by entrepreneurs such as the former Coal Mining Concession Work Agreement (PKP2B) mines that are more than 30 years old.

"Of course the production costs will increase and burden the company," he added.

Hendra continued, although the average selling price for the past two years has been quite high, the policy to increase royalty rates needs to look at the long term so that companies can survive in the midst of the energy transition era and maintain energy security.

"On the other hand, the state can also benefit from the state revenue side," he said.

He revealed that there will be two Government Regulations (PP) that will be issued related to the regulation of coal royalty rates, revised PP 91/2018 concerning Non-Tax State Revenue (PNBP) which will regulate coal royalty rates for IUP holders, and a PP concerning the Tax Treatment of the Coal Industry which will regulate royalty rates for IUPK OP holders.

Hendra explained that currently the royalty rate for PKP2B holders or generations 1, 2, and 3 is 13.5 percent. As for IUP holders, the rates vary, 3 percent, 5 percent and 7 percent based on the calories of coal produced.