The Indonesian Ministry of Energy and Mineral Resources has turned down a request made by the Indonesia Coal Mining Association (ICMA) to temporarily relax coal royalty payment due to the Covid-19 pandemic.
Ministry’s director of coal and mineral revenue, Johnson Pakpahan said that the ICMA request was not urgent. He added that the request, if realized, would undermine government revenue at a time when it’s spending a lot of money to deal with the impact of Covid-19.
ICMA has previously requested for temporary changes to the formula used in calculating the coal royalty by using actual transaction price instead of the so-called coal benchmark price (or HPB). The grouping has also requested for a delay of the royalty payment, at least 30 days after the coal has been loaded to the vessel.
Johnson said that using the HPB in calculating the coal royalty is meant to prevent transfer pricing practices made by coal companies. He added that the ministry turns down the ICMA request for a delay in the coal royalty payment because it would undermine government cash flow. He said that miners must continue to make royalty payment upfront.
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