The government officially stipulates the imposition of production dues or zero percent (0%) royalties for downstream coal companies.

This provision is contained in a Government Regulation in Lieu of Law (Perppu) Number 2 of 2022 concerning Job Creation which was stipulated on December 30, 2022.

In the discussion of the Sub-Energy and Mineral Resources (ESDM) Page 220 Paragraph 5, a number of provisions related to mineral and coal mining were amended.

In Article 39 of this regulation, it is stated that between Article 128 and Article 129 in Law Number 3 of 2020, Article 128A is inserted. Meanwhile, Article 128A paragraph 2 reads, The provision of certain treatment to state revenue obligations as referred to in paragraph (1) for coal development and/or utilization activities can be in the form of imposition of production dues/royalties of 0% (zero percent).

Tarumanegara University Energy and Mining Law Observer Ahmad Redi explained that this policy is quite ideal for business actors.

"The zero percent royalty policy is quite ideal as an incentive for companies that want to downstream coal," Redi said to Kontan, Monday (2/1).

Redi explained, in substance, the provisions in the Job Creation Perppu are almost the same as the Job Creation Law. In addition, the substance related to the mineral and coal issue is also considered the same.

"This means that the downstream substance of coal is still considered important and strategic," explained Redi.

Redi continued, coal downstreaming is very important for Indonesia because it can increase the added value of products, increase state and regional revenues and increase labor revenues. In addition, through coal downstreaming, it will create a fulfillment of domestic coal needs such as liquid coal and gas for fuel as well as the development of industrial estates.

Until April 2022, there were at least 11 companies that were committed to implementing coal downstreaming until 2029. Of the 11 companies, as many as 3 projects from 3 companies have been producing.

The three of them are the Semi Coke Project by PT Megah Energi Khatulistiwa with an input capacity of 1 million tons per year to produce semi-coke of 500 thousand tons per year. Then the Coal Upgrading-Briqueting Project by PT Thriveni has an input capacity of 130 thousand tons to produce briquettes as much as 79-85 thousand tons.

Finally, the Coal Briqueting Project has an input capacity of 30 thousand - 40 thousand tons per year to produce briquettes as much as 10,000 - 20,000 tons per year. A number of other projects are generally dominated by coal gasification by both PKP2B and IUP.

First, the coal to dimethyl ether (DME) project by PT Bukit Asam Tbk (PTBA) with a production capacity of 1.4 million tons per year.

The project is expected to start production in the second quarter of 2025. Second, the Coal to Methanol Project by PT Kaltim Prima Coal and PT Kaltim Nusantara Coal with a methanol production capacity of 1.8 million tons per year. This project is targeted to be completed in the second quarter of 2025.

Third, the Coal to Methanol Project by PT Arutmin Indonesia with a product capacity of 2.95 million tons per year. This project is targeted to start production in 2026. Fourth, the Coal to Methanol Project by PT Kendilo Coal Indonesia with a product capacity of 300 thousand tons per year. This project is targeted to start production in 2029.

Fifth, the Semi Coke Project by PT Multi Harapan Utama with a production of 500 thousand tons per year. The project is planned to start production in 2027. Sixth, the Coal to Methanol/DME Project Project by PT Adaro Indonesia is targeted to start production in 2026.

Seventh, the Gasification / Underground Coal Gasification (UCG) Project by PT Kideco Jaya Agung with a production capacity of ammonia of 100 thousand tons per year and urea of 172 thousand tons per year. The project is planned for production in 2027.

Finally, the Coal to Methanol / DME Project Project by PT Berau Coal with a semi-coking product capacity of 500 thousand tons per year. This project is targeted to start production in 2029.

Image source: DOK/AIMS

Source: https://industri.kontan.co.id/news/resmi-royalti-nol-persen-untuk-perusahaan-batubara-yang-lakukan-hilirisasi?page=2