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Thursday, 08 April 10
INDONESIAN ENERGY MINISTRY SEEKS LONGER MINING CONTRACTS - THE JAKARTAGLOBE


The Jakarta Globe reported that, Energy Minister Darwin Zahedy Saleh said he would seek to amend the mining law to address investors’ complaints about the length of contracts.

Speaking to reporters after meeting investors on Wednesday, Darwin said miners such as France’s Eramet were worried about the future of their projects because the law limits exploration licenses to eight years and production contracts to 20.

“Eramet wants licenses to last 50 years,” Darwin said.

“The concern was not only from Eramet but also from others investors, both national and foreign,” he added.

Darwin said the ministry would send a request to the House of Representatives this month asking that the law be amended to increase contract durations, but he offered no further details.

Bambang Setiawan, director general of coal, mineral and geothermal energy at the ministry, said on Wednesday that the mining law and its implementing regulations had done little to reassure companies operating here.

“This has created confusion for the investors,” he said.

He added that another cause of concern was the law’s domestic market obligations requiring mining companies to set aside a portion of their output to meet local demand, as well as the requirement for foreign investors to have a local partner.

The Energy Ministry has set a target for investment in the sector to increase by 56 percent from $18 billion in 2009 to $28 billion this year, including $2.5 billion in the mining sector.

The country has been struggling to secure investment to accelerate economic growth to between 6 percent and 7 percent a year. The tangle of laws and regulations has left many potential investors sitting on the sideline. The economy this year is expected to grow by about 5.5 percent.
Source:
The Jakarta Globe ( By: Reva Sasistiya)



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