1PWYP INDONESIA - Newsletter

ResourceAugust 2016

NewsNewsletter

G NANREVO C E

PWYP INDONESIA PROMOTE REFORM IN THE MINERAL AND COAL MINING SECTOR

PWYP Indonesia conducted kick-off meeting Program “Improvement of Forest and Land-based Mining Governance-SETAPAK” in the early February this year. This meeting which was attended by member, partner and networks of PWYP Indonesia does not only mark the beginning of the program, but also serves as a means to strengthen the advocacy strategy as well as collaboration among stakeholders in improving mineral and coal mining governance.

Aiming to promote reform in the mineral and coal mining, this program focuses on three main aspects, including mining permit, state revenue management also environmental rehabilitation and post-mining. Permit governance is not merely about permit revocation, but should be synchronized with the relevant policies, such as Local Government Law and One Stop Service. SETAPAK

Program is supported by The Asia Foundation and DFID-UKCCU.

While on the revenue stream, PWYP sees the importance to close the gap of potential lost, both in the tax and non-tax revenue. Environmental rehabilitation and post-mining also being the main concern of this program, given around 80% of mining permit doesn’t have reclamation and post-mining document. Moreover, ex-mining concession which has yet to rehabilitated has costed 25 victims in East Kalimantan.

Agung Budiono, program officer of PWYP Indonesia in the SETAPAK Program in the closing underlined the significance of collaboration among CSOs who have the same focus as well as constructive engagement between CSO and local government to improve mining governance. [RAWSR]

Ilustration of “Reformasi Tata Kelola Sektor Pertambangan” by PWYP Indonesia

SETAPAK News

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Directorate General Mineral and Coal, Ministry of Energy and Mineral Resources (MEMR) continues its efforts to curb the problematic mining permits as the follow-up of Coordination and Supervision of KPK in mineral and coal mining sector. This July, the directorate has revoked 534 non-Clean and Clear (CnC) mining permits.

The effort has been ongoing since May 2011. Currently, from total number of 10.348 mining permits in Indonesia, there are around 3900 mining non-CnC mining permits remaining (per April 2016).

Director General Mineral and Coal of MEMR Bambang Gatot Ariyono underlined that the 534 revoked mining permits are still bound by the obligations. “Those mining permits holders are obliged to pay tax and non-tax revenue (land rent and royalty),” said him.

According to Bambang, MEMR has verified 1079 mining permits that’s recommended to get CnC status, but MEMR follows up only 20% of the recommended mining permits. “The remaining mining permits need to get the reference from the governor in each region,” said Bambang. CnC process has entered the 17th phase.

Coordination and Supervision in

mineral and coal mining sector is a collaboration work between KPK, MEMR and local government. One of its focus is to improve mining permit governance by curbing the problematic mining permits.

CnC certification rests heavily on administrative and territorial aspect. While mining permits categorized as non-CnC are mostly due to the absence of tax ID number, overlapping between concession (same or different commodities), overlapping with the protection or conservation forest as well as the failure to meet financial obligations.

Non CnC mining permits are caused by the company not have Tax Id number, overlapping concession with same or different commodities, overlapping with protection/conservation forest, and not pay their financial liabilities yet.

Coordination and Supervision of KPK indicates that 75% of 10000s mining permits holders has yet to pay reclamation and post-mining fund. While Government Regulation Number 78 Year 2010 clearly mandates to do so. The inability of the company to meet this obligation has costed the lives of 25 children.[Asr]

Head of Energy and Mineral Resource (EMR) Agency of East Java Province and Chair of Association of Head of Provincial EMR Agency (ADPESDMPI), Dewi Putriatni conveyed the aspirations of the province on the changes of local revenue policy in FGD entitled “Problems of Local Revenue from Mining Sector after the Enactment of Local Government Law”, which is held by PWYP Indonesia along with ADPESDMPI on 16 March 2016 in Solo.

According to Dewi, the delegation of authority, specifically in the issuance of mining permit from the district to the province affects the extra workload of the provinces. However, this changes in not followed by sufficient additional fiscal incentive. The authority of permit issuance is in the province, while monitoring function is drawn to the central government and the tax is given to the district. Dewi added, it shall be followed by the changes of tax revenue distribution for non metallic mineral and rocks between the district and the province.

In another hand, Nasrullah from Directorate General of Budget, Ministry of Finance, affirmed that there is no changes in the local revenue policy. Revenue sharing fund from natural resources sector, including mining, still refers to by origin principle. However, it’s possible to change the existing policy following the developing situation. [RAWSR]

Association of Head of EMR Agency Calls for Policy Change on Local Revenue after the Enactment of Local Government Law

MINING PERMIT GOVERNANCE SHALL BE OVERSEEN

Doc. PWYP Indonesia

Doc. PWYP Indonesia

SETAPAK News

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The enactment of Local Government Law Number 23 Year 2014 brings change on the paradigm of division of government authority in managing natural resources, including mineral and coal mining sector.

Beforehand, the government affairs are regulated under Government Regulation Number 38 Year 2007. This regulation states that central, province, and district government each have 27, 18, and 18 authorities in the mineral and coal sector. The new law simplifies into 11 authorities in the central government and 7 authorities in provincial government.

The new local government law divides the implementation of government affairs in mining sector only between central and provincial government. Some are regulated by central government, including: determination of reserve area as part of national spatial; determination of mining area (WIUP) for mineral, metal, and coal also area for special mining permit (IUPK); determination of mining area for non-metal mineral and rocks

across the province and marine area of more than 12 mil; issuance of mining permits for foreign investment; also management of mining inspector and mining supervising official.

While the province has the authority to determine mining area for non-metal mineral and rocks in one province and marine area of up to 12 mil; issue production mining permits especially for processing and refining in the framework of domestic investment; determine reference price of non-metal mineral and rocks; also issue community mining permit in the community mining area (WPR).

Previously, the district government has the authorities to issue mining permits. But it has been fully drawn to the province. The district now only have the authority to issue geothermal direct use permit in their area. Additionally, Local Government Law is also consequential to the transfer personnel, fund, facilities, and document from the district to the province. [Asr]

Understanding the Mineral and Coal Permit After the Enactment of Local Government Act

The issuance of Presidential Decision (Kepres) Number 13 Year 2014 about The Stipulation of Indonesia’s Membership in the Open Government Partnership starts the implementation of open government initiative in Indonesia. This open government initiative emphasizes information disclosure, civic participation as well as access of technology improvement to promote transparency and accountability.

This initiative is translated through formulation and implementation of action plan of Open Government Indonesia (OGI) which this year enters the fourth action plan for 2016 and 2017. The action plan of OGI consists of commitment of ministries and agencies in the public delivery to natural resources sector.

Focusing on the forest and land governance reform, PWYP Indonesia along with ICEL, IESR and FWI urge the government to commit on several policies, covers: 1) EITI implementation in Indonesia, especially related to beneficial ownership transparency, 2) strengthening complaint handling system in the environment and natural resources sector, 3) accelerating 12.7 hectare of people manage forest, 4) improving transparency and openness of permit data, 5) opening space for public participation in one map policy. [RAWSR]

Guarding Forest and Land

Governance Reform through

Openness Initiative

Ilustration of “Reformasi Perizinan Di Bidang Pertambangan Minerba pasca

berlakunya UU No. 23 Tahun 2014”by PWYP Indonesia

SETAPAK News

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CSOs are Calling for Access of Energy for the Community

A number of civil society organizations that focus on natural resources issue attended Coordination and Supervision of KPK in the energy sector in Palembang this May. In this forum, CSO urged the government to realize access of energy for the community.

In electricity sector, the community right to get electricity also not completely fulfilled. The ratio of electrification in South Sumatera still in 80,44%. Regarding to electrification ratio, South Sumatera placed in the second lowest after Kepulauan Riau. Thus, CSO promoted the local government to optimize the utilization of renewable energy, such as Solar Power Plant (PLTS) to fulfill the electric supply.

Not limited to the energy sector, CSOs also called for more transparent manner of South Sumatra Province in disclosing mining permits revocation letter. South Sumatra government claimed that they have

revoked 78 mining permits. CSOs also highlighted state loss from the insufficient payment from mining companies. There are 167 mining permits that has yet to fully pay their financial obligations (underpayment). The nominal reaches IDR 46.3 billion and US$ 16 million

Environmental issue also put as the spotlight, considering more than 70% of mining permits in South Sumatra has yet to fulfill their obligation on the reclamation and post-mining rehabilitation. Whereas, this has been clearly mandated by Government Regulation Number 78 Year 2010. Thus, CSOs urge President Joko

Widodo to immediately issue mining moratorium policy at the national level. This policy will not only prevent the issuance of new permits, but also govern the problematic permits.

CSOs who attended the event are WALHI Sumsel, PINUS, LBH Palembang, HaKI, AMAN Sumsel, PeTA, SUMSEL Watch, FITRA Sumsel, Lingkar Hijau, dan PWYP Indonesia. Coordination and Supervision in the energy sector is a joint work between KPK, MEMR, and local governments. Coordination and Supervision in the energy sector covers 4 sectors, mineral and coal, electricity, oil and gas and renewable energy. [Asr]

Doc. PWYP Indonesia

Doc. PWYP Indonesia

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