JAKARTA. Ministry of Energy and Mineral Resources (ESDM) has not released the revision of Government Regulation No 79/ 2010 (PP No 79/2010) on Cost Recovery and Taxation Treatment for Oil and Gas Upstream Industry.
Vice Minister of ESDM Arcandra Tahar said, the revision has not been released, as the Ministry of ESDM and Ministry of Finance have not reached agreement related to this matter.
The two ministries have different opinions on transitional rules, which will be placed in the government regulation. “This is very significant, as it will determine whether the Government Regulation No 79/2010 will have positive impacts to the investors,” Arcandra said, Thursday (14/12).
The transitional rules have not yet been decided considering the impacts to the existing contracts in oil and gas blocs. Arcandra hopes this matter can be settled in an immediate time. “I hoped that the revision will be issued in the last month. But the problems were complicated,” he said.
Minister of ESDM Ignasius Jonan and Vice Minister of ESDM are scheduled to meet Minister of Finance Sri Mulyani on Monday (18/12). This meeting is expected to provide the best solutions related to the transition period.
The oil and gas upstream business participants expect that the revision will be issued soon. Therefore, it will boost the investment in upstream oil and gas industry. Subsequently, this is expected to increase oil and gas productions.
Arcandra admitted that the Ministry has several times mentioned to Indonesian Petroleum Association (IPA) that the revision will be launched immediately. However, “We have to settles some technical barriers before launching the revision,” he said.
As information, based on the estimation of Ministry of Finance, the revision will increase internal rate of return (IRR) of the projects from 11.59% to 15.16%.
Meanwhile, Director of IPA Sammy Hamzah said that IPA has a clear demand, namely freeing contractors from various fees and taxes. Sammy estimates that the revision of Government Regulation No 79 will relate to the cross split contracts. “Some articles of Government Regulation No 79 need to accommodate gross split contracts,” he said. (Muhammad Farid/Translator)
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