September 16, 2020 Read More →

Indonesian government ought not bail out coal mining industry


A new analysis by the Institute for Energy Economics and Financial Analysis (IEEFA), an energy think-tank, urges the Indonesian government not to provide a coronavirus bailout to the country’s ailing coal mining industry.

Propping up the sector, which faces multiple risks beyond the immediate perils posed by the coronavirus-induced economic slump, could leave Indonesia lumbered with underperforming coal assets and cost billions at a time when government revenues are down sharply, warns the report.

If Indonesia were to grant industry-wide royalty relief to salvage mining firms, it would put at risk US$1.1 billion in royalties and US$1.2 billion in taxes collected last year from the 11 coal companies analysed. A royalty is the amount charged by states for the right to extract resources. 

Ghee Peh, IEEFA energy analyst and the author of the report, said the economic value of coal assets and reserves was set to come under pressure as energy markets pivot to cheaper renewables and the fossil fuel loses its lustre among traditional investors as well as industry players. 

[Tim Ha]

More: Indonesia should deny feeble coal mining sector coronavirus bailouts: Report

Posted in: IEEFA In the News

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