OIL, GAS CONTRACTORS STILL OWE US$83.49 MILLION TO STATE

By Andi Abdussalam


        Jakarta, March 18 (ANTARA) - The government will continue to ask five oil and gas contractors to meet their obligation of paying a total of US$83.49 million in outstanding income tax.

        "We continue to monitor and ask the five companies to pay their tax arrears," Budgeting Director General of the Ministry of Finance Anny Ratnawati said here on Tuesday.

        Early this month, the finance ministry disclosed that the five contractors still owed US$83.49 million to the state, after several of them had paid US29.62 million (US26.18 percent) of the US$113.11 million unpaid income taxes.

        Finance Minister Sri Mulyani, when giving an explanation to the Fuel Oil Inquiry Committee of the House of Representatives (DPR) recently, said that there were five oil contractors who still owed the state some US$113.1 million in belated income tax payments.

        The unpaid income taxes were discovered during an audit carried out by the Development Finance Comptroller (BPKP) in 2008 and 2009.

        The five oil contractors were ExxonMobil Oil Indonesia, Joint Operating Body (JOB) of Pertamina and Golden Spike Raja Blok, Kangean Energy Indonesia Ltd, Santos UK (Kakap 2) Ltd, JOB Kodeco Energy Co Ltd.

        According to the BPKP document, the largest debtor was Kangean Energy Indonesia Ltd with a total debt reaching US$45.059 million, which included US$30.45 million in unpaid tax and US$14.61 million in penalties.

        The second largest is JOB Kodeco Energy Co Ltd with a total debt at US$32.229 million, which included US$21.78 million of unpaid income tax and US$10.45 million in penalties.

        ExxonMobil is the third debtor with a total debt of US$22.816 million. Santos UK and JOB Pertamina-Golden Spike have debts of US$2.38 million and US$10.62 million respectively.

        Following reports about the unpaid income taxes by the five oil and gas contractors company, Oil and Gas Regulating Board (BP Migas) head R Priyono said the five contractors had paid their debts so that there was no such arrear amounting to US$113.2 million.

        "They have paid the bills in January 2009," Priyono said in a text message to ANTARA.

        In the meantime, Energy and Mineral Resources Minister Purnomo Yusgiantoro said he had never received any report from the finance ministry on the unpaid income taxes of the oil contractors.

        "We really want those tax arrears to be reported to us so that we can reprimand them," the minister said before attending a working meeting with the DPR's Commission VII which deals with energy affairs recently.

        The minister said BP Migas had neither received a report about the tax arrears but it had issued a clarification on the matter after learning about it from newspapers.

        Spokesman of the Ministry of Finance Harry Z Soeratin said several of the five debtor companies had paid their tax obligation amounting to US$29.62 million dollars, or about 26.18 percent of the total unpaid income taxes worth US$113.11 million.

        Thus, the five contractors still owe US$83.49 million to the state. Soeratin said that the figure of the US$113.11 million unpaid taxes were based on the finding of the BPKP audit done in 2008 and 2009.

        He said that in following up of the finding, the directorate general for budget affairs of the finance ministry had written to the five oil and gas contractors asking them to pay the tax remainders based on the audit of the BPKP.

        According to Finance Minister Sri Mulyani Indrawati, tax obligations are stipulated in Indonesia's oil and gas contracts. Private contractors must pay 48 percent of their gross revenue while state-owned oil company Pertamina's obligation is only 40.5 percent of its gross revenue.

        The income tax must be paid by the 15th of the following month at the latest. The contractors must pay interest of 2 percent a month if they are late in the payments.

        Basically, state revenues from the oil and gas sector come from the production sharing contractors, whose contracts are drafted based on Law No. 8/1971 on the State Natural Oil and Gas Mining Firms.

        Based on the contracts, the government will get 85 percent of the net operating income (NOI) from the oil proceeds while the contractor 15 percent. As regard to the gas proceeds, the government will get 70 percent and the contractor 30 percent.

        The proceeds that go to the government have included all contractor's tax obligations (such as income tax, added value tax, land and building tax) and non-tax obligations such as exploration and exploitation fees.

        Data from the finance ministry shows that the income tax from oil and gas sector last year reached US$7.93 million, up from US$3.54 million in 2007.

        In the meantime, the number of oil and gas contractors has continued to increase in the past six years from 96 to 203 at present.

        The investment of the 203 oil and gas contractors this year is expected to reach US$16 billion.***2*** (T.A014/A/HAJM/B003) 2. 17:00. (T.A014/A/A014/B003) 18-03-2009 17:06:49