Government told to develop refineries<\/p>\n
Leony Aurora, The Jakarta Post, Jakarta<\/p>\n
Against a backdrop of regular fuel scarcities and increasing fuel
\nconsumption, the House of Representatives has requested that the
\ngovernment prioritize the construction of refineries by both the
\nstate and private sector.<\/p>\n
Legislators said in a hearing with the minister of energy and
\nmineral resources and state oil and gas firm PT Pertamina on
\nMonday that the government should provide incentives and
\nfacilities to encourage investment in the refining sector.<\/p>\n
"We will support the government if it requests budget funding
\nfor the construction of refineries," said members of the House
\nenergy and mining commission. "But we will need clear proposals."<\/p>\n
Energy minister Purnomo Yusgiantoro responded by saying that
\nhis ministry would ask for funding for refinery construction out
\nof next year's budget.<\/p>\n
At present, there are nine oil refineries operating in
\nIndonesia with a total capacity of about one million barrels per
\nday (bpd). The government had said earlier that it would build
\nfour more oil refineries over the next four years so as to reduce
\nfuel imports.<\/p>\n
With domestic fuel consumption rising by some 7 percent per
\nyear, the government, through Pertamina, currently has to import
\n300,000 barrels of crude oil and 400,000 barrels of petroleum
\nproducts each day to ensure adequate supplies.<\/p>\n
Pertamina's cash flow problems have repeatedly caused fuel
\nstocks to drop below the ideal of 22 days supply. On Monday,
\npremium gasoline stocks stood at only 12.5 days.<\/p>\n
Separately, energy commission legislator Dito Ganinduto said
\nthe government should consider project financing schemes to
\nencourage refinery construction.<\/p>\n
"A refinery with a capacity of 100,000 bpd costs approximately
\nUS$1.5 billion," he said. "This would be a very heavy burden
\nindeed on the state budget."<\/p>\n
He further said that investors would not be interested in
\ninvesting in refineries if the government continued to pay only a
\nsmall fee for oil refining, and persisted in subsidizing fuel
\nheavily.<\/p>\n
"Investors will only come if we let market mechanisms
\ndetermine prices and stop subsidizing fuel," said Dito.<\/p>\n
According to the new oil and gas law, which was enacted in
\n2001, Pertamina will have to relinquish its monopoly over the
\nrefining, distribution and retail sides of the industry across
\nthe archipelago starting November this year.<\/p>\n
Although many investors have expressed interest in building
\ngas stations, capital-intensive endeavors such as refineries and
\nfuel storage depots have yet to attract investment.<\/p>\n
The Oil and Gas Upstream Regulatory Agency (BP Migas) has
\nrequested lower import duties for the capital goods, such as
\nmachinery and materials, required for the building of such
\nfacilities.<\/p>\n
The Ministry of Finance is currently considering the proposal.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/government-told-to-develop-refineries-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }