JAKARTA: Indonesia is removing royalty payments for coal used in its downstream sector in a bid to boost its coal processing industries, a government regulation reviewed by Reuters showed.

The world's top exporter of thermal coal aims to develop its coal processing industry to replace energy imports, such as refining coal to gas to reduce its liquefied petroleum gas imports, while optimising the use of its domestic coal.

Companies usually pay 2% to 7% of calorific value of the coal to the central government in royalties, depending on the calorific value of the coal and if it has been mined from underground or open pit mines.

The regulation took effect on Feb. 2.

The energy ministry will issue a further regulation clarifying which coal processing activities are eligible to pay 0% royalties, the document showed, without giving a timeline.