Stumbling over Coal
The extension of Tanito Harum’s mining permit is skirting round the law. President Jokowi’s consistency is being tested.
President Joko Widodo must ensure that the mining enterprises system is not in breach of Law No. 4/2009 on Minerals and Coal. The confusion over the Tanito Harum permit proves that the government is inconsistent in implementing policy and has stumbled into breaking the law.
The Tanito case is highly controversial. In January, four days before the contract ended, the company suddenly obtained a special mining business permit (IUPK). This permit was issued by the energy and mineral resources ministry without a tender process. The company, which is affiliated with Harum Energy owned by tycoon Kiki Barki, was awarded an operating area of 34,500 hectares, the same as when it was a coal mining company work agreement contractor (PKP2B).
The fuss over this permit attracted the attention of the Corruption Eradication Commission (KPK), whose chairman, Agus Rahardjo, sent a letter to President Jokowi reminding him that the granting of mining permits is regulated by the Minerals and Coal Law. Energy Minister Ignasius Johan eventually revoked Tanito Harum’s mining permit.
The extension of Tanito’s permit is clearly in breach of the regulations. The Coal and Mineral Law guarantees that work agreements remain in force for the duration of the contract. But after the contract ends, the mining company is automatically obliged to comply fully with the provisions of the Coal and Minerals Law. It cannot immediately obtain an IUPK. The former operating area of the PKP2B contractor must be put out to tender, and state-owned enterprises must be given priority to manage it. Coal mining areas have a maximum size of 15,000 hectares.
The energy ministry’s excuse, that the contract extension is based on the old regulation, namely the third revision of Government Regulation No. 23/2010, is clearly contrived. The granting of the permit to Tanito is like cutting the corner, because currently the government is working on the sixth revision to the government regulation on mining. The deliberations on this revision have been protracted because of differences between ministers. State-Owned Enterprises Minister Rini Soemarno is insisting the revision has to be in line with the law concerning the policy on holders of first generation’s mining work contracts that are about to expire.
Apart from Tanito Harum, there are seven coal mining companies with contracts that are about to end, among them Arutmin Indonesia, Kaltim Prima Coal and Adaro Indonesia. They have come to dominate the coal mining industry in our country in recent years. The end of these contracts of large companies should be used to spur on major increases in the benefits for our country. Some of these former mining areas could be given to state-owned enterprises, which currently only have around a seven percent share of the coal mining sector.
President Jokowi should not allow this friction over mining permits to continue. He also needs to ensure that the government stays within the law. The consistency of Jokowi’s stance regarding mining policy is now truly being tested because some of the coal mining companies’ owners supported his reelection campaign.
It is crucial that the KPK steps in to oversee the process of granting coal mining permits. There are indications that mining companies are attempting to dictate to the government, resulting in a wishy-washy policy. The KPK needs to do more than study the regulations and advise the president. It should investigate and uncover the possibility of bribery behind the granting of coal mining permits.