Troubled miners pay portion of royalties

Desy Nurhayati , The Jakarta Post , Jakarta | Tue, 09/23/2008 10:05 AM | Business

Five coal producers accused of withholding government royalties have provided an advance payment to the state as a show of goodwill in the dispute with authorities.

Finance Minister Sri Mulyani Indrawati said the companies had paid the government a combined Rp 600 billion ($65 million) in royalty debts, which would be counted toward the total coal mining royalties owed to the state.

"They have all settled the (Rp 600 billion) payment recently," Mulyani said at the Presidential Palace on Monday.

In addition to being an act of goodwill, the payment was meant to begin resolving the dispute, which has gone on for more than three years.

PT Kideco Jaya Agung, PT Kaltim Prima Coal (KPC), PT Arutmin Indonesia, PT Berau Coal and PT Adaro are among the six companies allegedly withholding the royalties until they receive a tax refund from the government.

Another company, PT Kendilo Coal Indonesia, currently in talks with the government over its obligation to pay the debt, has decided not to respect the goodwill commitment, as it may discontinue production.

On Sept. 1, the State Development Finance Controller (BPKP) announced the five companies had agreed to pay the Rp 600 billion in advance without, however, providing a deadline.

According to the deal, Kideco agreed to pay Rp 110 billion, with KPC agreeing to Rp 150 billion, Arutmin to Rp 100 billion, Berau Coal to Rp 90 billion and Adaro to Rp 150 billion.

The dispute between the coal producers and the government escalated in early August when the government banned 14 executives from traveling overseas over allegations the six companies failed to pay royalties amounting to Rp 7 trillion (US$769 million) between 2001 and 2007.

The mining companies have denied any wrongdoing, saying the royalties were withheld to compensate for value-added tax (VAT) refunds owed to them by the government.