Indonesian coal miners are now allowed to make early revision of their 2020 Work Plan and Budget, locally known as Rencana Kerja dan Anggaran Biaya (RKAB), amid increasing uncertainty due to the Corona virus outbreak.
Minister of Energy and Mineral Resources Arifin Tasrif has issued Ministerial Regulation No. 7/2020, which among others allows for the early revision of the RKAB. Under the new policy, the coal miners can propose for a revision of the RKAB using the first quarter production performance. Under the previous 2018 ministerial regulations, coal miners normally submitted the proposed revision of their RKABs in July using first and second quarter production data.
As per Minister of Energy and Mineral Resources Regulation No. 7/2020 Article 89, the revised RKAB of a company may submit a revised RKAB by submitting a report on the first quarter period and no later than 31 July in the current year. Submission of the revised RKAB is no longer limited to production capacity. In the previous regulation, the Minister Regulation No. 11/2018, the revised RKAB can be submitted once in the current year, if there is a change in the level of production capacity. Changes to the RKAB were proposed after the company submitted its second quarterly report no later than July 31 of the current year.
The Chairman of the Indonesian Mining Institute (IMI) Irwandy Arif said, in this new regulation there were also changes to the provisions related to the revised RKAB that can be done after the submission of the first quarter report, which previously could only be done after the submission of the second quarter financial statements.
“The revision of the RKAB can be done in early April and can only be done once a year, for reasons not solely due to changes in production levels”, said Irwandy in his written statement on Wednesday, 25th Mar’20.
In addition, the purpose of the issuance of this policy is to simplify licensing and regulation in the mineral and coal sector. Some licenses were abolished, such as approval for changes in directors or commissioners, and granting approval for the addition of sales transport cooperation was also eliminated by the introduction of the Sales Verification Module (SVM) system.
While the Executive Director of the Indonesian Coal Mining Association (ICMA) Hendra Sinadia said, with objective conditions like now, it is estimated that production will only reach the target of the government. This means that production of only 550 million tons (MnT) is on target, unlike the previous year which far exceeded the target.
“So for the time being, the most conservative projection is that the realization of production might be in line with the target set by the government, it might be achieved, unlike in 2018 and 2019 where the realization far exceeds the target”, he said.
According to him, it is very difficult to make predictions this year with conditions filled with uncertainty. “Companies that are members are currently operating normally to meet the RKAB target”, he said.
Previously, coal production last year set the highest record with the realization reaching 610 MnT. The amount is 24.74% higher the coal production target based on RKAB 2019 which reaches 489 MnT.
Last year’s realization of 610 MnT was up 9.52% from the realization of 2018 coal production which reached 557 MnT.
According to the Director General of Mineral and Coal at the Ministry of Energy and Mineral Resources, Bambang Gatot Ariyono, the realization of coal production which reached 610 MnT was due to increased production from holders of Mining Business Permits (IUP).
Meanwhile, Corporate Secretary of Indonesia listed coal giant PT Bumi Resources Tbk Dileep Srivastava said that the company plans to review its RKAB next month. “We intend to review next month, looking at the condition”, he said. Bumi has set a target for its coal production this year to increase by about 5 percent to 87 million-90 million tons compared to last year.
VP for Corporate Communication of Indonesia listed PT Adaro Energy Tbk, Febrianti Nadira said that at this time the company has no plan to revise its 2020 RKAB. However, the company will continue to monitor market condition. Adaro has set 2020 coal production guideline of 54 million-58 million tons.
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