Unlicensed Mining (PETI) conducted by community groups in private forest area is rife in Muara Enim district which causing environmental degradation. The purpose of this study is to find out the institutional forms associated with illegal coal mining activities. The study used a qualitative approach that illustrated how unlicensed mining (PETI) still able to operate despite violating the law. The result of this study indicates the existing formal institutions did not run so well which lead to the creation of non-formal institutions who permits illegal activities. There are few technical requirements that PETI could not provide if they were legalized to be public mining. Good coordination and teamwork between government and law enforcers along with mining corporation are desirable to control the development of PETI and the impact it brings, especially in private forest.Keywords: private forest, institution, environmental damage, unlicensed mining, coal mining