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UPDATE 1-Indonesia port graft investigation disrupting coal shipments
March 22, 2017 / 10:37 AM / 6 months ago

UPDATE 1-Indonesia port graft investigation disrupting coal shipments

* Police raid coal ports in East Kalimantan

* Almost 30 large ships waiting to load thermal coal

* Delays follow large-scale disruptions in February (Adds detail, further comment from police spokesman and mining association)

By Fergus Jensen and Henning Gloystein

JAKARTA/SINGAPORE, March 22 (Reuters) - Indonesia is cracking down on corruption and widespread graft at some of its top coal export hubs, disrupting shipments to destinations across Asia.

Indonesia is the world’s top exporter of thermal coal, still the main feedstock for global power generation. Interruptions to coal’s output and shipment can impact seaborne prices of the fuel as well as wholesale electricity markets.

The investigations that began on Friday are targeting port operations along the large anchorage area off Samarinda in East Kalimantan, officials said on Wednesday, delaying ships waiting to load new supplies from the region’s mines.

Police initially raided four port facilities, including the Samudra Sejahtera Stevedores Cooperative (Komura) office, a Transportation Ministry statement said, based on allegations of “blackmail, corruption, money laundering, and thuggery”.

“We are cracking down on patterns linked to illegal fees,” Transportation Ministry spokesman J. A. Barata told Reuters.

Almost 30 large dry-bulk ships are waiting offshore Samarinda to load coal, according to shipping data in Thomson Reuters Eikon. The data shows that some of the ships have been waiting to load coal since late February.

The office of the stevedores’ cooperative did not answer calls seeking comment.

EXTRA FEES TO LOAD COAL

East Kalimantan Police spokesman Ade Yaya Suryana told Reuters that authorities were targeting stevedores that were asking coal companies in the Mahakam area to pay extra fees to load ships.

One coal mining company had been asked by stevedores to pay 3 billion rupiah ($225,000) per month in illegal fees based on tonnage, Suryana said, adding that such fees had been charged on shipments since last year and that police estimated Komura had amassed several hundred billion rupiah from the illegal charges.

Komura chairman Jaffar Abdul Gaffar told local media outlet tempo.co that 6.1 billion rupiah confiscated by police in the raid on the cooperative was for wages and not from illegal fees.

“I just took it out of the bank,” Gaffar said, according to tempo.co.

Transportation Minister Budi Karya Sumadi said in the ministry statement he had asked police “not to hesitate in cracking down on all forms of illegal fees.”

The crackdown follows coal shipment disruptions that occurred last month, when authorities put up road blocks in investigations that prevented workers from accessing ports.

Indonesian Coal Mining Association chairman Pandu Sjahrir told Reuters that several coal producers had reported shipping and logistics delays resulting from the investigations.

The police investigations are preventing many ports from arranging staff for loading and unloading coal, said one coal trader on the condition of anonymity, as he was not authorised to talk to the press.

“It’s very chaotic, delays in loading are common anyway, so these (investigations) have further disrupted coal operations,” he said.

East Kalimantan Transportation Agency, which oversees port authorities and marine transportation, declined to comment on the investigations.

Coal miners in the region include Banpu unit Indo Tambangraya Megah (ITM), and Bayan Resources .

The two mining companies could not be reached for comment.

($1 = 13,328 rupiah)

Reporting by Fergus Jensen and Agustinus Beo Da Costa in JAKARTA, and Henning Gloystein in SINGAPORE; Editing by Tom Hogue

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