Mahakam Black Gold in KPK's Shot

Coal mining in East Kalimantan has a myriad of problems. It is suspected that there are hundreds of trillions of rupiah in potential lost taxes.

Sunny weather accompanied the Chairman of the Corruption Eradication Commission (KPK) Agus Rahardjo and his entourage through the Mahakam River. Agus, accompanied by KPK adviser Mohammad Tsani Annafari and several regional officials, explored the river, which is the main traffic flow for the coal trade in East Kalimantan.

That trip in mid-November last year used four speedboat starting from the Water Police District of Samarinda City. Correspondent Katadata.co.id, joined the fast boat carrying Agus and his entourage.

Along the way, Agus watched the pontoons, coal-carrying ships, go to the port of Muara Pegah, the first gateway for coal to come out of East Kalimantan. About 30 minutes into the journey, Agus asked the fast boat to be stopped. He pointed to the pontoon hiding behind the trees, which was attached by a large rope by the river.

Coal is usually weighed in jetty or wharf belonging to a mining company, then transferred to a pontoon or barge. The pontoon carrying the coal then moves to the port.

"It's probably illegal coal," said Tsani from above speedboat. He believes that because he has received a report like this, the Port Authority and Port Authority (KSOP) Office and the Energy and Mineral Resources (ESDM) Office should immediately take action.

Not long after, the journey continued. When entering Anggana District, Kutai Kertanegara Regency, about 15 minutes from the pontoon location, Agus again asked the speedboat to pull over near jetty empty that is anchored by the river. Not far from there were two giant mountains of coal.

A middle-aged man, Udin, guarded the anonymous dock. He said jetty it is often rented for the process of loading and unloading coal. “I don't know who this owner is, name jetty always changing,” said Udin.

Suddenly Tsani rebuked the Head of the ESDM Office of East Kalimantan, Wahyu Widi Heranata, questioning the monitoring process. There should be no rental system in use jetty. "This is against the rules. It can be reported that they made this system,” said Tsani.

Wahyu looked shocked and pale. "We were lost. Later we will coordinate with the governor," he said.

The four-hour trip around the Mahakam river revealed the potential for coal trade leaks in East Kalimantan. Since the last few years, the KPK has indeed highlighted coal trade data that never matched between government agencies. "We did a search in the field to see why the difference occurred," said Agus Raharjo.

For several years, the KPK has observed asynchronous data between the Directorate General of Customs and Excise (Ministry of Finance), the Ministry of Trade, and the Ministry of Energy and Mineral Resources. Based on a report received by the KPK, in 2016 coal exports at Customs and Excise were recorded at 367 million tons, the Ministry of Trade 366 million tons, and the Ministry of Energy and Mineral Resources 331 million tons. Here, the difference in trade data between Customs and the Ministry of Energy and Mineral Resources is US$ 1,4 million or Rp. 21 billion.

Agus also emphasized that he must immediately fix the data because there is a potential for tax leakage. To that end, the KPK will intensively monitor the supervision of the coal trade in East Kalimantan. Monitoring in this province can serve as a model for other regions. "If not soon, it will continue to happen. We clean the Mahakam River from upstream to downstream," said Agus.

Head of Task Force III of the Coordination and Supervision Unit for Prevention of KPK Dian Patria said monitoring in East Kalimantan was important because there were Muara Berau and Muara Java ports. The two ports serve ship to ship (STS) activities, loading and unloading coal from barges to vessels or large ships in the middle of the sea. Here, the harbor becomes the meeting point of the river, far from the land so it is difficult to monitor.

East Kalimantan has also received attention because the local government is very massive in issuing mining business permits (IUP). By the end of 2017, provincial and city or district governments in East Kalimantan had issued the most coal IUPs, namely 1.143 of the total 2.870 national permits.

The total coal production from East Kalimantan in 2017 was 82,87 million tons with Kutai Kertanegara Regency as the largest producer up to 65,11 million tons. The area of ​​coal mines in this province reaches 5,2 million hectares.

Chaotic Coal Trade Data

Since the last few years, the KPK has conducted a study on coal sector revenues. In 2010, the anti-corruption agency highlighted the differences in coal export data between the Ministry of Energy and Mineral Resources and the World Coal Institute (WCI).

WCI said Indonesia's coal exports in 2010 amounted to 298 million tons. Meanwhile, the Ministry of Energy and Mineral Resources claims that exports in that year were only 166 million tons. This means that there is a difference of 132 million tons.

Until now, the KPK is still exploring differences in coal export data between Customs, the Ministry of Trade, and ESDM. Dian Patria said the difference in the volume of coal exports has the potential to cause state losses. "There are allegations of manipulation of trade data or the potential for illegal coal trade," said Dian when met some time ago.

Indonesia Corruption Watch (ICW) also conducted comparative research on coal export trade data for the period 2006-2016. The non-profit organization's study showed that there were unreported coal export transactions of US$ 27,062 billion or equivalent to Rp 365,2 trillion (at an exchange rate of Rp 13.500).

In detail, the alleged under-transactions in 2006 amounted to US$ 1,455 billion, then around US$ 1,66 billion in 2006 to 2009. This number increased again in the 2010-2013 period with an average value of US$ 2,889 billion. Finally, in 2016, the alleged value of unreported transactions was US$ 2,917 billion.

This unreported coal export is certainly detrimental to the state's finances. The missing royalties and taxes are estimated at Rp 133,6 trillion. In detail, the potential for lost tax obligations is Rp. 95,2 trillion and royalties or the Coal Production Fund (DHPB) of Rp. 38,5 trillion.

Based on ICW's study, the alleged unreported coal transactions came from several countries such as China, Japan, South Korea, Taiwan, and the Philippines. Specifically, ICW investigated coal transactions to the Philippines. "Custom Philippines opens up trade data so it's easy to make comparisons," said ICW's Budget Monitoring and Analysis Division Coordinator, Firdaus Ilyas.

From a comparative analysis between the Philippines' custom data and the Surveyor's Report, ICW noted that for the 2014-2016 period there were 1.380 coal transactions to the country totaling 46,32 million tons worth US$ 2,38 billion.

From this data, ICW traced 772 transactions. As a result, 519 transactions from Indonesia had a smaller FOB sales value than the Philippines. The difference in sales value is US$ 86,04 million, an indication of potential state losses. "The smaller the reported sales value, the less state revenue from taxes and royalties will be," he said.

In some cases, the mode of document falsification is most often used in dealing with coal reports. So, said Firdaus, the data on the volume and type of coal listed in the document do not match the actual conditions.

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Transactions of coal companies from Indonesia, which are smaller in value than the Philippines data, were recorded at 72 companies. One of them is PT Adaro Energy Tbk. The company during the 2014-2016 period made 36 transactions with lower sales value from Indonesia compared to the Philippines.

Of the 36 transactions, the total volume recorded was the same in both countries, namely 1,58 million tons. However, the FOB value for the Indonesian version is US$ 67,45 million and the FOB for the Philippines is US$ 71,6 million. Thus, the difference between the two sales values ​​is US$ 4,15 million.

The company owned by Garibaldi 'Boy' Thohir, when confirmed, stated that he could not explain the cause of the difference. "We do not have data on this difference, so we cannot explain why there is a difference between the sales value of Indonesia and the Philippines," said Adaro Corporate Communications Febrianti Nadira.

Furthermore, Ira, as she is usually called, stated that Adaro's coal shipments to the Philippines did not go through intermediaries. “Almost all of Adaro's coal trade, including to the Philippines, uses the business-to-business so they don't use a broker," he said.

Apart from Adaro, a subsidiary of PT Indo Tambangraya Megah Tbk, PT Trubaindo Coal Mining, has a trade value difference to the Philippines of up to US$ 3,72 million. During 2014-2016, there were 25 transactions sent by Trubaindo with a volume of 1.701.129 tons. The transaction value for the Philippine FOB version is US$ 115,9 million, while the Indonesian version is US$ 112,22 million.

Indo Tambang's Corporate Communication Manager Diana Yultira stated, as the owner of a mining concession, the company openly reports monthly sales data to the government. Regarding the difference in data, he did not explain further. "We do not have the capacity or interest to investigate sales data released by the government of the buying country," Diana said.

In addition to trade to the Philippines, ICW is investigating Trubaindo's coal transactions to India. The Supreme Audit Agency (BPK) audit of the Ministry of Energy and Mineral Resources in 2015 stated that Trubaindo's exports to the country used invoice number 13108102569. The purchase document shows an export volume of 80.483 metric tons with an FOB sales value of US$ 5,7 million.

However, based on contract documents found by ICW in the same transaction, the actual volume recorded was 88.000 tons and the sales value (FOB) was US$ 6,14 million. So there is an indication of a difference in sales of US$ 436 thousand.

Likewise with March 2015 shipments, where based on BPK's inspection there were exports of 67.244 tons with a sales value (FOB) of US$ 4,76 million. Meanwhile, the contract documents and invoices in the same transaction show a volume of 81.926 metric tons worth US$ 5,7 million.

Regarding this matter, Diana Yultira stated that her company has publicly reported to the Indonesian government every month. All coal shipments to buyer countries -including India and the Philippines- always go through trading companies or users. “Basically we don't know how much profit the company makes signals, said Diana.

Tax observer from the Center for Indonesia Taxation Analysis (CITA) office Yustinus Prastowo said the difference in data between Indonesia and the destination country was an indication of the loss of tax potential. "However, to conclude that there has been a state loss, it is necessary to support detailed trade data between companies from the two countries," he said.

Firdaus said the potential for manipulation of trade data occurred due to weak supervision. So far, Customs and Excise officers have received data on the number of exports and calories of coal based on surveyor reports, which unfortunately were hired by coal companies.

However, the Director General of Customs and Excise Heru Pambudi said his team was already working with the Directorate of Taxes in monitoring trade data. As a result, from the data exchange, there are several companies that pay less taxes. "We are following up with an advanced collection mechanism, as well as guiding them so that their tax obligations are fulfilled," said Heru when confirmed.

In addition, Customs and Excise together with the Ministry of Energy and Mineral Resources and the Ministry of Transportation are in the process of increasing the supervision of the coal trade. "We have received a recommendation from the KPK and we are following up on repairing several vulnerable points in East Kalimantan." he said. | Writing source: Dataword