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Graft, illegal practices plague coal mining in South Sumatra
A study by the Indonesia Corruption Watch (ICW) estimated that around Rp 365 trillion (US$25 billion) worth of coal transactions between 2006 and 2016 had gone unreported, potentially causing state losses.
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Heavy equipment is operated at a coal mine in East Kalimantan. (JP/Indra Harsaputra)
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idespread illegal coal mining activities in South Sumatra are estimated to have caused millions of dollars in state losses, a recent antigraft agency investigation has found.
The Corruption Eradication Commission (KPK) found in August that the transport of illegally mined coal in the province, through Lampung, had been going on for years.
Dian Patria, the KPK’s regional coordinator for graft prevention coordination and supervision, said the agency had initially investigated a tipoff pertaining to unauthorized coal mines in South Sumatra. Later, the antigraft body’s team found that the commodity was being transported using a 10 ton truck from Muara Enim regency to Lampung through Martapura district, where unidentified people joined the convoy to safeguard the transport.
In Lampung, the coal is transported by a 25 ton truck to factories or to Bakauheni Port to be later transported by ferry to Merak Port in Banten. The illicit transporting activities occur at midnight to avoid detection by authorities and locals.
Such illegal coal activities, Dian said, had inflicted state losses, as the state did not receive non-tax state revenue from the unlicensed practices. Aside from the financial losses, the illicit business practices have also caused environmental and social losses, ranging from damaged roads across Lampung and traffic congestion, to social conflict due to the damaged streets.
The governor of South Sumatra banned road vehicles from transporting coal through the province in 2018. In Lampung, road transportation is allowed but all road vehicles transporting commodities must obtain a permit from the province's transportation agency.
The documented coal from South Sumatra is usually transported by train from the province to a seaport terminal owned by state-owned coal mining firm PT Bukit Asam in Panjang Port. It can also be transported using boat to Tulang Bawang regency in Lampung.
