The Minister of Energy and Mineral Resources recently issued Decree Number 258.K/MB.01/MEM.B/2023 (Decree 258/2023) on 18 August 2023. The decree regulates the procedures for securing Mining Business License Areas (Wilayah Izin Usaha Pertambangan – WIUP) dan Special Mining Business License Areas (Wilayah Izin Usaha Pertambangan Khusus – WIUPK) for metal mineral and coal mining.
The issuance of Decree 258/2023 certainly impacts business actors in the metal mineral and coal mining sector, especially those who wish to secure WIUP or WIUPK. Moreover, Decree 258/2023 also regulates provisions for the formation of the Auction Committee for securing WIUP or WIUPK.
Decree 258/2023 revokes and replaces several provisions previously regulated in the legal instruments below:
- Appendix VII Guidelines for Determining Memberships, Requirements, Duties and Authorities of the WIUP and WIUPK Auction Committee in Decree of the Minister of Energy and Mineral Resources Number 1798.K/30/MEM/2018 on Guidelines for the the Preparation, Stipulation and Issuance of WIUPK for Minerals and Coal (Decree 1798/2018); and
- Appendix II Guidelines for Organizing Auctions for Securing WIUP and WIUPK for Metal Minerals and Coal Mining in Decree of the Minister of Energy and Mineral Resources Number 24/K/30/MEM/2019 on the Amendment to Decree 1798/2018 (Decree 24/2019); and
- Appendix III Guidelines for Implementing Priority Issuance of WIUPK in Decree 24/2019.
In this edition, ET Consultant Legal Updates will discuss several points regarding technical adjustments regulated in Decree 258/2023.
General Adjustments
Decree 258/2023 stipulates that WIUP and WIUPK through priority list can only be obtained by State-Owned Enterprises (Badan Usaha Milik Negara/BUMN) and Regional Government Owned Enterprises (Badan Usaha Milik Daerah/BUMD). Apart from the priority list, WIUP and WIUPK can be obtained through an auction process by other entities. The types of business actors permitted to participate in WIUP or WIUPK auctions, as well as the size of mining areas are summarized in the table below:
Mining Area Size | Types of Business Actors |
<= 500 Hectare | Local BUMD, local private enterprises that meet the criteria for micro and small-scale enterprises, cooperatives, individual companies |
> 500 Hectare | BUMN, BUMD, local private enterprises that meet the criteria for medium and large scale enterprises |
It is important to note that WIUP and WIUPK can only be obtained by business actors, cooperatives, and individual companies that have not owned one of the mining licenses below:
- Mining Business Licenses (Izin Usaha Pertambangan – IUP)
- Special IUP (IUP Khusus – IUPK)
- IUPK as a continuation of operation contracts/agreements
- Community Mining Licenses (Izin Pertambangan Rakyat/IPR)
- Rock Mining Licenses (Surat Izin Penambangan Batuan/SIPB)
- Mining Service Business Licenses (Izin Usaha Jasa Pertambangan/IUJP)
- Transportation and Sales Licenses
- Contracts of Work (Kontrak Karya/KK)
- Coal Contracts of Work (Perjanjian Karya Pengusahaan Pertambangan Batubara/PKP2B)
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Procedures for Securing WIUPK by Priority
WIUPK is granted to BUMN and BUMD through priority offers, the procedural provisions of which were previously regulated in Appendix II of Decree 24/2019. To understand changes in procedures stipulated by Decree 258/2023, ET Consultant summarizes the comparison of procedures in Decree 24/2019 and Decree 258/2023 in the table below:
Stage of Process | Decree 258/2023 | Decree 24/2019 |
Issuance of WIUPK offer by the Minister | Four calendar days | Two days |
BUMN or BUMD declare their intention to participate in the offer | 14 days after receiving offer from the Minister | 10 days |
Minister coordinates with the interested BUMN and/or BUMD (Decree 258/2023) / Auction Committee issues the auction documents to the relevant business entities (Decree 24/2019) | 60 calendar days | Three days |
BUMN and/or BUMD submit their statement of readiness to secure the WIUPK | 10 working days | 10 days |
Issuance of WIUPK | Three working days | Three days |
Announcement of the candidates that pass the pre-qualification stage | – | Two days |
Submission of offering price and opening offer | – | Two days |
Evaluation of the scoring results and ranking by the Auction Committee | – | Two days |
Announcement of the auction winner | – | Two days |
Standstill period | – | Three days |
Evaluation of and responses to the standstill | – | Five days |
Completion of the auction payment by the winning candidate | – | Three days |
Beside the changes in duration and simplification of process that have been summarized above, the adjustments also made about the coordination between Ministry and BUMN/BUMD that gives recommendation to BUMN/BUMD for:
- Recommending establishment of a new joint-venture business entity within 90 calendar days after the relevant Minutes of WIUPK Offer signed; or
- Recommending utilization of a different business entity in which the capital is owned by the relevant BUMN/BUMD within 60 calendar days after the Minutes of WIUPK Offer signed.
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Procedure for Securing WIUP or WIUPK Through Auction
To understand the adjustments made in the procedures for securing WIUP or WIUPK through auctions in Decree 258/2023, ET Consultant has summarized the comparison of procedures and duration of each stage of process on below table:
Stage of Process | Decree 258/2023 | Decree 24/2019 |
Announcement of auction plan | 14-60 days before auctions | 20 days |
Announcement of WIUP/WIUPK auction | Five days | |
Pre-qualification Process | ||
Registration and obtaining auction documents | Three working days | Five days |
Submission of pre-qualification documents | 10 days | |
Evaluation of pre-qualification documents | Two working days | Five days |
Announcement of candidates who have passed the pre-qualification phase | Two working days | Three days |
Qualification Process | ||
Submission of price offers and price opening | One working day | Two days |
Evaluation and stipulation of ranking | Two working days | Two days |
Review of the conduct of the auctions | Two working days | – |
Preparation and stipulation of the auction winner ranking | One working day | – |
Announcement of the auction winner ranking | Two working days | Two days |
Standstill period | Two working days | Three days |
Evaluation of and responses to the standstill | Two working days | Five days |
Stipulation of the auction winner | Three working days | Three days |
If BUMN/BUMD participates in the process of obtaining WIUPK by priority but does not reach consensus in the coordination stage, then WIUPK can be obtained through the auction process procedure. Auction process for WIUPK for BUMN/BUMD is similar to the conduct of obtaining WIUP for metal mineral and coal mining.
Moreover, if there is no BUMN/BUMD interested in obtaining a WIUPK, then the WIUPK will be offered to private business entities in the mineral and coal mining sector.
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