Jakarta, July 15 (Antara) - The Indonesian government is optimistic of concluding by this month-end its negotiations on the extension of copper and gold miner PT Freeport Indonesia's (PT FI's) operation permit that expires in 2021.
"The government, through the Ministry of Energy and Mineral Resources (ESDM), expects to accomplish the negotiations before October," ESDM Minister Ignasius Jonan stated in Jakarta on Wednesday (July 5).
In order to accelerate the negotiation process, the government is planning to invite President Director of US-based Freeport Mc Moran Richard Adkerson to discuss the operation permit of PT Freeport Indonesia.
ESDM Secretary General Teguh Pamudji said the ESDM, Ministry of Finance, and several other agencies have formed a negotiation team to discuss four agenda on the extension of PT FI's operation permit.
The four agenda comprised the divestment of 51 percent of Freeport shares, extension of its operation permit, construction of a smelter, and investment stability.
The ESDM ministry is in charge of deliberating matters relating to the extension of the operation permit and the construction of the smelter. The government has requested a smelter, whose construction has to be completed by the company in 2022.
The Finance Ministry negotiates issues relating to the divestment of Freeport's stake and the investment stability that is linked to fiscal matters. It will discuss provisions on tax and royalty. With regard to the divestment, the company will be obliged to allocate its 51 percent shares to the companies owned by state and provincial governments.
It is expected that at the end of July 2017, the negotiation team would reach an agreement on the four agenda, united in one formulation.
"We will meet this week," Pamudji was quoted as saying by Liputan6.com on Monday (July 10).
After the team reaches an agreement, it will bring the consensus to be discussed with PT FI. The ESDM minister and finance minister will invite Adkerson at the end of this month to discuss the report by the negotiation team.
Hence, the government has set a target of wrapping up negotiations at the end of July 2017. However, all will depend on Freeport's response to the government's position as formulated by the team.
Meanwhile, PT Freeport Indonesia expects the ongoing deal with the Indonesian government to mutually benefit both parties, the company's Executive Vice President Tony Wenas stated.
"Although we should consider the lobbying process, the company hoped the negotiation would immediately result in a final agreement," Wenas noted in Jakarta.
Wenas remarked that the two parties had yet to reach a decision since four topics were still under discussion.
Both the ESDM ministry and Freeport have yet to agree on the taxation systems. Freeport has called for a "nail down" mechanism, while the government has sought to apply the "prevailing" scheme.
In order to continue exporting concentrates, the company has to pay tax based on the "prevailing" scheme, as Freeport's operational status had changed from Work of Contract to the Special Mining Permit.
The Indonesian government signed its first work contract with Freeport McMoran Inc on April 7, 1967, with exclusive mining rights on a 100 square-kilometer tract in Ertsberg, Papua. The work contract extension signed by Freeport and the government in 1991 will expire in 2021. It is now seeking another extension of the operation permit until 2041.
In the meantime, various non-governmental organizations (NGOs) want the government to uphold state sovereignty on issues related to PT Freeport Indonesia, so that the country's natural resources could be used as much as possible for the benefit of the people.
"The Indonesian government should not hesitate to uphold the sovereignty of the country in the face of Freeport issues," Huma Society researcher Yustisia Rahman said in a written statement in Jakarta on Friday (July 14).
Rahman said this is because the international law states that investment should benefit the government in the face of foreign investors. He revealed that the debate over the relationship between the role of the state and investment in the country has been long-standing, especially with regard to the 'sanctity' of contracts principle.
The sanctity of contracts principle is derived from the principle of legal philosophy, which reads "pacta sunt servanda" (agreement must be kept). The principle is often used by international investors to protect their interests in the contract.
However, he also reminded of the other legal philosophical principle, namely the "clausula rebus sic stantibus," which states that the agreement may not be applicable because there have been a number of fundamental changes that occurred from the situation.
"This principle states that an agreement or consensus among nations can be declared invalid if a fundamental change of circumstances causes the agreement or consensus to not be applied," he explained.
Rahman reminded that if this problem reaches the International Arbitration Institution, then the government should not worry because there are examples of cases when the principle of "clausula rebus six stantibus" is taken as consideration for reaching the decision.
Indonesia for Global Justice (IGJ) Research and Advocacy Coordinator, Budi Afandi, added that special treatment given to Freeport should be stopped, including the discourse on the government regulation related to investment guarantee requested by Freeport.
Therefore, Public Communication Manager of the Publish What You Pay (PWYP) Indonesia, Agung Budiono, called for the contract documents and the process and outcome of government and Freeport negotiations to be made open to the public.
Meanwhile, Executive Director of Indonesian Human Rights Committee for Social Justice (IHCS) Gunawan stated that the constitutional foundation to uphold state sovereignty in the Freeport's controversy is sufficiently strong.
Gunawan argued that the interpretation of the Constitutional Court on the right of control by the state is very clear, and the concept is solely aimed at the prosperity of the people.***3***(A014/INE/o001)EDITED BY INE(T.A014/A/BESSR/O. Tamindael) 15-07-2017 11:32:2 |
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