To attract investment in the oil and gas sector, the government will reduce cost recovery by up to 30%. The plan to reduce cost recovery is being calculated by the Minister of Energy and Mineral Resources (ESDM) Ignasius Jonan.
Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan said cost recovery could be reduced because world oil prices were weakening. The target of reducing cost recovery this year is the US $ 10.4 billion and next year is lower than that. I am optimistic that Ignasius Jonan and Arcandra Tahar (Deputy Minister of Energy and Mineral Resources/ESDM) can make it better, "said Luhut.
Luhut said cost recovery was reduced by 30% for projects whose contracts have not yet started. The reduction in cost recovery is only about 5% for projects that have signed contracts. He hopes that the cost recovery cut will attract investors to invest in the oil and gas sector.
"Now, foreign investors come with technology and competence. We have to fight with competence in our field, we want to reduce cost recovery.
The government is targeting the revision of Government Regulation Number 79/2010 concerning the cost recovery of oil and gas investment to be completed soon. Discussions on the revision of Government Regulation number 79/2010 between the government and oil and gas players such as the Indonesian Petroleum Association (IPA) have found an agreement.
Secretary-General of the Ministry of Energy and Mineral Resources, Teguh Pamudji, added that the plan to cut cost recovery has been agreed with Commission VII of the House of Representatives (DPR) that the cost recovery in 2017 should be below the US $ 10 billion. He said the plan was indeed being studied. However, he could not reveal further about the study. ESDM Deputy Minister Arcandra Tahar explained that there is still room for cutting cost recovery.
He said, for the signed oil and gas contract, there will be discussions with the contractor. From this discussion, we will find out what parts can be suppressed. He did not want to mention that the cost recovery could be cut by up to 5%.
"The team will see again which parts can be reduced,".
Arcandra revealed, for oil and gas projects that have not yet been signed, such as the Masela Block and East Natuna, have more room to reduce cost recovery. But again he did not want to reveal what the cut was. Chairman of the Indonesian Employers Association (Apindo) in the EMR sector Sammy Hamzah supports the government's plan to reduce the cost recovery in the oil and gas sector by up to 30%.
He said the reduced cost recovery was able to attract investment interest because the oil and gas contractor's share was better. Sammy said that efforts to reduce cost recovery costs could logically be realized.
This is in line with the low world oil price. This condition causes the cost of supporting services in the oil and gas sector to also decrease. He said that the oil and gas contractor together with the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) must sit together in renegotiating existing contracts.
Head of SKK Migas, Amien Sunaryadi, revealed that the high-cost recovery of Cooperation Contract Contractors (KKKS) has been caused by vendor companies who have contracted with KKKS.
"Currently, there are 139 KKKS companies that have contracted with SKK Migas, and I see that the cost recovery is uncontrollable," said Amien.
According to Amien, the incident was caused by each KKKS company using a third party (vendor) in working on oil and gas drilling.
"If you want to drill, it is not the KKKS that will drill, but the KKKS will make a contract with the drilling company. Likewise, if you need pipes, the KKKS will not make the pipes, the KKKS will sign a contract with the pipe supplier. If the KKKS wants to build buildings, facilities, wants to build roads, wants to buy ships, wants anything, it is not the KKKS that builds them. KKKS buy and sign contracts with vendors, ”said Amien.
Amien said, there are thousands of contracts between KKKS and vendors. He admitted that his party had never checked the truth of these contracts.
"The number of vendors is more than 1,500. So there are tens of thousands, maybe hundreds of thousands of contracts between KKKS and vendors. Moreover, up-vendor companies, ".
The former deputy chairman of the Corruption Eradication Commission (KPK) said that each KKKS has so far entered a cost recovery figure based on the amount paid to the vendor. And this amount depends on the contract between the KKKS and the vendor.
"Therefore I can confirm that checking only up to KKKS is useless. If this is not checked properly, then no one can be sure that this contract is efficient. Especially if the contract with the vendor is further spelled out with the possibility that the vendor will contract with the sub-vendor. Then, it could be deeper into sub-vendors with sub-vendors.
Investor Daily, Page-1, Wednesday, Oct 19, 2016
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