Zero Royalty for Coal Downstream Processing

Summary

President Joko Widodo issued Government Regulation No. 25/2021 on the Energy and Mineral Resources sector's Implementation, which took effect on February 2, 2021. This implementing regulation for Law No. 11/2020 on Job Creation regulates the exemption of production fees or royalties for the coal industry. 

Article 3 Paragraph (1) Chapter II on the regulation states that the holders of mining business permit (IUP) for production operation, special IUP for production operation, and IUP as contract/agreement operations that seek to improve domestic coal value-added are entitled to specific treatments in the form of zero royalty.

The zero-percent royalty takes into account energy independence and the fulfillment of industrial raw material. According to Article 3 Paragraph (3), royalty exemption applies to the volume of coal used in value-added activities. "The amount, requirements, and procedures for royalty exemption must obtain approval from the minister in charge of government affairs in the state finance," Article 3 Paragraph (3) Chapter II of PP No. 25/2021 mentioned.

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