Wanted by the taxman: Indonesia's $5 billion of lost coal

Tue Oct 1, 2013 7:45pm EDT
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By Fergus Jensen

JAKARTA (Reuters) - Indonesia may be the world's top exporter of thermal coal, but that masks an embarrassing fact for a government scrambling to raise revenue - more than $5 billion worth of the fuel is mined illegally and goes untaxed each year.

Export and consumption data shows Indonesia produces around 12-15 percent more coal annually than the ministry of energy and mineral resources reports. That's enough to supply Taiwan, the world's fifth-largest coal importer, for a year.

The $460 million of lost tax revenue that industry officials estimate this represents would provide Jakarta, which is considering roughly doubling royalties paid by coal producers, with some of the funds it needs to redress its budget deficit.

The gap between recorded and actual output has also attracted the attention of Indonesia's top anti-graft agency the Corruption Eradication Commission (KPK).

A combination of export data from the Bureau of Statistics, using customs information, and consumption data from state electricity utility Perusahaan Listrik Negara PLNEG.UL, shows Indonesia's total coal output at 451.9 million tons in 2012.

That is 56 million tons higher than production estimates from the energy ministry, which gathers its information from licensed companies and regional authorities.

"The question we've always asked is: 'where's the missing 50-to-60-something million?'" said Pandu Sjahrir, commercial committee chairman for the Indonesian Coal Mining Association, which represents 125 coal firms including PT Adaro Energy (ADRO.JK: Quote) and PT Berau Coal (BRAU.JK: Quote).

Indonesia's government pegged the average benchmark coal price in 2012 (HBA) for its coal at $95.48 per ton last year, which would mean the missing 56.3 million tons is worth $5.4 billion.   Continued...

Trucks and machinery are pictured at a PT Exploitasi Energi Indonesia Tbk coal mine at Palaran district in Samarinda, Indonesia east Kalimantan province, in this September 14, 2013 file photo. REUTERS/Zevanya Suryawan/Files