Jakarta. The government will revise a 2014 regulation on minerals and coal mining to provide legal certainty for ongoing investments in the sector, a minister said over the weekend.

Energy and Mineral Resources Minister Sudirman Said said that a 2014 decree (No. 77) stipulates that mining contracts are allowed to propose permit extension — two years before the contracts expire at the soonest or six months before they expire at the latest .

He said the government would revise the aforementioned clause to provide business certainty for investors. The ministry is currently studying the regulation.

“The two-years contract extension proposal does not make any sense considering the huge investment [involved]. It needs to be reviewed,” he told reporters in Jakarta.

Sudirman claimed that the revision is not only meant for Freeport Indonesia, a local unit of US mining giant Freeport McMoRan. The revision, he stressed, is to guarantee the investment certainty in the minerals and coals sectors generally.

He added that the planned revision is also based on a 2015 presidential decree on a policy of natural resources management for the betterment of the Papuan economy. The revision will follow the path of the presidential decree headed by the National Development Planning Agency (Bappenas) and the minerals and coal team at the Energy Ministry.

Meanwhile, the director general of minerals and coals at that ministry, Bambang Gatot, said there were several options in determining the limit of permit extension. One of the options, he said, is by considering the number of investments.

“Is it normal if [a company] with big investments must propose the extension two years before the contract expires?” he said.

Similar to Sudirman, Bambang denied that the revision was related to Freeport’s permit extension.

“We want to revise the regulation not only for one company, not to entertain Freeport but to give an impact to all mining companies,” he said.

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Jakarta. The Indonesian government has announced that the price of subsidized Premium fuel, a widely used low-octane gasoline, and subsidized diesel will stay steady this month despite the global crude oil price decline, a minister said on Friday.

Energy and Mineral Resources Minister Sudirman Said said the price of Premium for Java, Madura and Bali islands will stay at Rp 7,400 (54 cents) per liter and at Rp 7,300 per liter outside of the three islands, while the price of subsidized diesel (Solar) will remain the same at Rp 6,900.

“There will be no change in the price of [subsidized] fuels,” said Sudirman in Jakarta on Friday.

In an effort to maintain economic stability despite the decline in global prices, the minister said the government would not allow the price of the subsidized fuels to fluctuate rapidly.

He also said state energy company Pertamina, which distributes the two type of fuels, still posted Rp 12.5 trillion in losses in distributing the two subsidized fuels in the January to July period.

The loss was attributed to debts accumulated by the company as it has to sell subsidized fuels below costs.

The government has found that price setting for fuel is better done every six months, and changes will be unlikely in the coming months.

“In November, it will be decided how it will be managed,” Sudirman said.

Agus Cahyono, a director for oil and gas development at the Ministry of Energy and Mineral Resources, said the government would create a so-called “stabilization fund” to ensure it has buffer funds to deal with fluctuating oil prices and maintain retail stability in domestic markets.

“For this year, it hasn’t been budgeted in the state budget, it will be discussed for the 2016 budget,” he said.

He added the stabilization fund shouldn’t be seen as a subsidy, as it will only serve to help stabilize the fuel price so that the private sector can make long-term calculations needed for business planning.

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Jakarta. Natsir Mansyur, a deputy chairman of the Indonesian Chambers of Commerce and Industry, or Kadin, passed away at MMC Hospital in Jakarta on Tuesday. He was 52.

The businessman, who was born in Makassar on April 1, 1963, will be buried on Wednesday at the Karet Tengsin cemetery in Jakarta.

“He passed away at 2:30 p.m.,” said Eddy Rahardjo, a Kadin member, said on Tuesday.

He said Natsir fell sick on Tuesday morning and was taken to the hospital. He did not specify the illness, but only confirmed that Natsir died at MMC.

Natsir was also a director at smelting company Indosmelt and chairman of the Indonesia Gold and Copper Association (ATEI).

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Jakarta. With coal prices still struggling to recover, the Indonesian government has decided to shelve its plan to demand increased royalty payments from miners, a senior official said on Wednesday.

“The government won’t raise [the royalties] without consideration, but we will monitor the situation. So, we’re putting the plan to increase coal royalties on hold,” said Bambang Gatot, the director general for mineral resources and coal at the Energy and Mineral Resources Ministry.

Back in March, the ministry revealed that it was considering to increase royalties for coal miners in the country in hopes of increasing non-tax revenue from coal and metals.

The new rate was originally slated to be imposed from April 1 but repeatedly delayed, amid concern that rising royalty costs would lead to job losses and encourage illegal mining. Last month, the government it would impose the new scheme in September.

Bambang said that the ministry had already determined the size of the royalty hike for high-calorie and middle-calorie coal, but that the plans had not yet been sent to the Finance Ministry. He didn’t disclose any further details.

Commodity prices globally, including coal, have been trading at their lowest levels since 2009. The coal reference price in Indonesia was set at $59.19 per ton for July 2015 by the Energy Ministry, which is a 0.67 percent decline from June, when it stood at $59.59 per ton.

The ministry is now planning to change the equation behind the reference price as another strategy to revive coal prices in the country.

Adhi Wibowo, director of coal business development at the ministry, said that the reference price in Indonesia was still pegged to international market indices despite the country’s position as a major low-calorie coal producer. He declined to elaborate.

“We’re still assessing [the new formula]. We will announce it in time,” he said in Jakarta on Wednesday.

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Jakarta. Indonesian Energy Minister Sudirman Said has conceded that the enforcement of rupiah use in all local transactions will have to be a gradual process, in what is shaping up to be another half-baked policy by the government.

The minister said he agreed with the spirit of the regulation that went into force on Wednesday — to stabilize the rupiah amid volatility in the financial markets — but said players in the energy and mineral resources sector had called for a transition period for the full implementation of the policy.

“We and Bank Indonesia have agreed that in the next six months, we will set out three transaction categories. We will issue an implementing regulation as guidance for the business community,” Sudirman said in Jakarta on Wednesday.

The central bank has issued a regulation that makes it mandatory for all financial transactions in Indonesia to use the rupiah.

The regulation, announced on March 31 and effective as of July 1, requires all cash and non-cash transactions — including for making payments, settlement of obligations and payrolls — made by corporations or individuals to be in the local currency. This regulation is a follow-up from a 2011 law.

Sudirman acknowledged that foreign-exchange transactions, particularly in the US dollar, remained high in the oil and gas, minerals, coal, renewable energy and electricity sectors.

He noted that the bulk of equipment for use in the oil and gas sector had to be imported, and hence paid for in foreign currency.

He pegged the alone value of transactions in this sector alone at up to $15 billion, of which only about half could feasibly be carried out in rupiah.

Sudirman said similar conditions prevailed in the mineral and energy sectors. “So it’s not really all that possible if every transaction is to revert to the rupiah,” he said.

The ministry and BI have identified three different types of transactions that must be treated differently, based on the degree of difficulty of switching to the rupiah as the default currency.

The first category includes transactions for office rent, housing, vehicles and salary payments for local employees. Sudirman said that for this category the central bank had provided a six-month transition period to fully transition to the rupiah.

The second category is for fuel purchases. “The policy will still respect existing contracts that have been signed [that use foreign currency], but after those contracts expire, any extensions must be in rupiah,” Sudirman said.

The third category includes transactions where a shift to the rupiah is seen as most difficult, including salary payments for foreign staff, drilling services, and boat hire.

“These are functional expenditures, so it’s not possible in these cases to pay in rupiah. Please continue with foreign currency. Companies must clearly identify these kinds of transactions,” the minister said.

The regulation stipulates that mandatory rupiah use does not apply for certain transactions, including acceptance of grants from abroad, international trading transactions such as exports and imports, bank savings in foreign currency, and international financing transactions.

Sanctions for violating the regulation include written warnings, penalty fees, or a prohibition against undertaking future financial transactions.

The rupiah has declined nearly 7 percent against the US dollar this year amid volatility in the financial markets triggered by the Greece crisis and the prospects of a hike in the US Federal Reserve’s key interest rate.

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Jakarta. The House of Representatives’ Commission VII and the Energy Ministry approved on Monday Indonesia’s oil production target of between 800,000 and 830,000 barrels per day during a working meeting to deliberate the 2016 State Budget.

Energy and Mineral Resources Minister Sudirman Said considered the figure realistic based on this year’s oil output so far.

“We will continue to monitor production until the end of the year so we can set a clearer target for next year,” he said.

Monday’s working meeting was the third between the ministry and Commission VII, which oversees the country’s energy sector.

Indonesia’s current oil production stands at 802,046 barrels per day on a monthly average and 77,347 per day on a yearly average, according to ministry spokesman Dadan Kusdiana.

The figure is still below domestic demand, which is recorded at 1.43 million barrels per day. To cover the gap, the government imports oil from various countries.

Indonesia is currently in talks to rejoin the Organization of the Petroleum Exporting Countries (OPEC) despite being a net importer of the commodity.

Monday’s meeting also saw the government and the legislature approve a subsidy of Rp 1,000 (7 US cents) per liter for gasoline and diesel.

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Jakarta. The Indonesian government’s recent move to change Freeport Indonesia’s contract was purely for the sake of legal and investment certainty, a minister said, as critics continued to slam the “privilege” extended to the mining behemoth.

“Whatever our decision may be, it is to give legal and investment certainty,” Sudirman Said, the minister for energy and mineral resources, said in Jakarta on Monday. “The government does not have any other agenda.”

He added his office would submit a report on the new scheme to President Joko Widodo.

Ministry spokesman Dadan Kusdiana said last week that the government might grant Freeport Indonesia, the local unit of US mining giant Freeport-McMoRan, a 20-year extension on its operating permit after the company agreed to transfer from a Contract of Work (CoW) to a Special Mining Business Permit, or IUPK. The government claims the change is not in violation of prevailing regulations on mining.

Sudirman said Indonesia welcomed anyone who wished to invest in the country, with the government obliged to provide a good investment climate as well as legal certainty.

In the case of Freeport Indonesia, he added, the government can provide both through the IUPK.

Freeport Indonesia’s current contract ends in 2021 and it was only eligible to request an extension in 2019.

“If we wait until 2019 to make a decision, Freeport might see a decline in production. Their output is already slowing; that is not what we want,” Sudirman said, citing the large investments the miner was planning in the country.

Freeport Indonesia plans to invest $15 billion in underground mining facilities at its Grasberg concession in Papua, and $2.3 billion in a new smelter in Gresik, East Java.

“Any company that wants to invest $17 billion [in Indonesia], be it Freeport or anyone, must be given certainty,” Sudirman added.

The miner agreed to work under the IUPK during a meeting last week between Freeport-McMoRan chief executive James R. Moffet, Freeport Indonesia president director Maroef Sjamsoeddin and Sudirman.

Observers had urged caution over the change of status, citing a possible breach of regulations. They also urged the government to focus more on the advantages for Indonesia, such as a bigger stake in the miner from the current 9.36 percent.

Of the 26 mining companies currently operating under a CoW, only Freeport Indonesia has agreed to change the nature of its new contract.

Sudirman said his ministry would review the challenges involved in contract renegotiations and would no longer offer memorandums of understanding to extend existing contracts.

Only Freeport Indonesia was able to secure a six-month extension of its export permit through an MoU on contract renegotiations in January after the miner settled on Gresik as the location of its new smelter.

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Jakarta. The government is willing to grant Freeport Indonesia, a local unit of the US mining giant Freeport-McMoRan, a new 20-year permit to continue its operations in Papua, an official at the Energy and Mineral Resources Ministry said on Wednesday.

Ministry spokesman Dadan Kusdiana said that Freeport agreed to work under a Special Mining Business Permit (IUPK).

“The ministry has been looking for a solution so that Freeport’s operations can continue without violating any regulations,” Dadan told a press conference. “After a meeting with the president [Joko Widodo], we suggested that the cooperation between the government and Freeport be changed from a ‘contract of work’ [framework] to the Special Mining Business Permit.”

Based on a 2014 government regulation on mineral resources and coal mining, a new ‘contract of work’ must be issued two years or at least six months before the contract ends. Therefore, Freeport would have to request an extension in 2019, as its current contract is set to expire in 2021.

Dadan said it was still unclear when the IUPK would be granted and when it would take effect.

“With Freeport’s approval, the next stage is finalization, to get [formal] approval from the government,” he said.

Dadan explained that under the new system, the government was no longer on an equal footing with Freeport Indonesia — the nation’s No. 1 taxpayer — but placed above it.

“The ‘contract of work’ is based on equality between the state and the investor, but the special mining permit puts [the state in a] stronger [position] because the state can revoke the permit any time,” he said. “It puts the state in the proper position.”

Dadan added that the ministry and Freeport were aiming to finish all contract amendments before the end of July, based on a previously agreed memorandum of understanding between the two parties.

Freeport Indonesia’s president director Maroef Sjamsoeddin confirmed that under the new scheme, the company was still committed to building a smelter in Gresik, East Java, investing a total of $2.3 billion.

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Jakarta. Indonesia could soon be purchasing crude oil form Iran and tapping into the Middle Eastern nation’s oil fields.

An Indonesian delegation, including Energy and Mineral Resources Minister Sudirman Said and Sofyan Djalilis, the coordinating minister for economic affairs, is in Iran to discuss greater energy cooperation between the two countries.

“The government is considering opportunities to buy Iranian crude directly,” said Dadan Kusdiana, spokesman for the Ministry of Energy and Mineral Resources.

Iran has the world’s fourth largest oil reserves, but its nuclear program has seen it slapped with a number of sanctions by the international community, and its key energy sector targeted.

The United States government and the European Union have blocked the import, purchase and transport of Iranian crude.

But Indonesia could soon join other countries in Asia, such as China, India and Japan, and start buying oil from Iran.

Dadan said Indonesia’s energy minister and his Iranian counterpart agreed on two key points during a meeting on Saturday: the purchase of Iranian crude by Indonesia and opportunities for Indonesia to invest in Iran’s upstream petroleum sector.

“Those two agreements are concrete actions for South-South cooperation and followup action of our president’s KAA meeting,” Dadan said, referring to a meeting between President Joko Widodo and Iran’s President Hassan Rouhani on the sidelines of the Asia-Africa Conference (KAA) in April.

In the coming days the delegation is scheduled to attend several meetings with key officials from Iran’s energy sector, including representatives from government-owned National Iranian Oil Company.

“At the joint commission meeting, both countries will talk about cooperating in the upstream petroleum sector, both in the exploration and the exploitation phases,” Dadan said.

“We will also explore how we can work together in the engineering sector and technical services for oil-processing refineries and storage facilities in Indonesia.”

Dadan said there were challenges due to sanctions on Iran, but they would be discussed by the two countries at later dates.

An Iranian delegation is set to visit Indonesia in June to build on the ministers’ visit.

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Jakarta. The Indonesian Mining Professionals Association, or Perhapi, has announced its support for a 35,000-megawatt national electricity program, saying it will help boost the country’s coal exports by 50 percent.

Budi Santoso, head of Perhapi’s working group for mining policy, said Indonesia’s use of domestic coal has not reached its optimum level. The nation produces up to 400 million metric tons of coal for foreign markets each year, providing 100 million for domestic needs.

“The 35,000 MW electricity program will mostly rely on coal-fired power plants [PLTU] and needs 150 million metric tons [of coal] or a half of [the country's coal] exports,” Budi said.

The Perhapi official has called on the government to revise its coal-related royalty policies as its expenses in the sector are larger than its income. The state earns some Rp 8 trillion ($615 million) in royalties from state-owned electricity company PLN’s use of coal, but power subsidies have reached Rp 20 trillion.

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