Jokowi Wants Final Recommendations on Mahakam, Freeport by April
17 March 2015 14:56 WIB
TEMPO.CO, Jakarta – President Joko Widodo has asked the Ministry of Energy and Mineral Resources to submit the final recommendations regarding the Mahakam Block's management and the CoW extension of PT Freeport Indonesia. According to Energy Minister Sudirman Said, the president has given his ministry one month to submit the recommendations by April 2015.
The minister told Bisnis Indonesia that both recommendations will result in crucial decisions as they woul affect the annual value of additional state revenues. Freeport's investment value currently reaches US$17.5 billion while the Mahakam Block is worth US$25.2 billion.
The government has decided that the management of Mahakam block will be handed over to Pertamina once current operator Total E&P Indonesia's contract expires in December 2017. However, there has been no official decision yet because relevant parties are still discussing technical issues.
Meanwhile, Freeport's contract extension stumbles upon Government Regulation No.77/2014 on the Third Amendment to Government Regulation No.23/2010 on the Implementation of Mineral and Coal Mining Enterprises, which stipulates that a may be extended by no sooner than two years before the prior contract ends.
Freeport's CoW will expire 2021, so an extension could only be given in 2019.
Sudirman said he will seek other ways to allow Freeport's extension be given before 2019. One way is by using the Special Mining License (IUPK) regime.
Some points discussed in Freeport's contract amendment include royalty increase, downsizing concession area, obligatory share divestment, and smelter construction.
BISNIS INDONESIA