Indonesian Minister of Energy and Mineral Resources Arifin Tasrif issued new regulation related to mineral and coal mining business activities. However, one of the articles in this regulation is considered to collide with the Mineral and Coal Law.
The regulation referred to is Ministerial Regulation No. 7/2020 concerning Procedures for Granting Areas, Licensing, and Reporting on Mineral and Coal Mining Business Activities.
Among the 115 articles, Article 111 is slipped which regulates the Mining Business Permit (or IUPK) of Production Operations as a continuation of the Work Contract (or KK) or Coal Mining Concession Work Agreement (or PKP2B). The article states that the Minister of Energy and Mineral Resources can stipulate other provisions for holders of Production Operation IUPK in order to ensure the effectiveness of business activities and ensure a conducive business climate, “taking into account the scale of investment, operating characteristics, amount of production, and/or environmental carrying capacity”.
The Executive Director of the Center for the Study of Energy and Mining Law Bisman Bhaktiar said the Minister of Energy must be careful with this article. “The minister gives great authority to himself even though the authority of officials should be given by the Act,” he stated on Wednesday, March 24, 2020.
In addition, the regulation regarding the extension of KK and PKP2B to IUPK is contrary to the Mineral and Coal Law. “In the law there is no term IUPK,” he said. KK and PKP2B which have expired must be returned to the state as a state reserve area or auctioned by prioritizing stated-owned enterprises. The contract is not directly extended to a business permit.
According to him, the government should reflect from experience. The Ministry of Energy has drawn up similar rules related to IUPK in the sixth revision of Government Regulation Number 23/2010 concerning Implementation of Mining and Mineral Mining Business Activities. But the proposal was rejected by the SOE Ministry. The Corruption Eradication Commission also stated that extending the contract to IUPK violated the law.
Tarumanegara University legal observer Ahmad Redi said the government should abide by the existing rules. “In the Mineral and Coal Law there are already good provisions regarding the existence of mining business licenses with various arrangements,” he said. In addition, the legal norms and legal status of an entity such as an employment contract and PKP2B contained in the law must also be regulated in an equal regulation, not a lower regulation such as a Ministerial Regulation.
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