The 2000 state budget<\/p>\n
Having reviewed the 2000 State Budget draft, I see that oil
\nand gas revenue still has a crucial role even though it is not
\ntoo dominant in generating funds for the state coffers. From a
\nprojected income tax of Rp 53.02 trillion, oil and gas are
\nprojected at Rp 8.83 trillion, about 17 percent. While from a
\nprojected natural resources revenue of Rp 30.32 trillion, the oil
\nand gas revenue is projected at Rp 28.63 trillion, about 95
\npercent. In total, the oil and gas revenue is expected to
\ncontribute Rp 37.46 trillion, about 27 percent, of a projected
\ndomestic revenue of Rp 137.70 trillion.<\/p>\n
The government assumes that an average oil price will be US$18
\nper barrel at an average exchange rate of Rp 7,000 per dollar.<\/p>\n
There are two factors which will influence whether the target
\nof Rp 37.46 million can be achieved, i.e. the crude oil price and
\nthe rupiah exchange rate. Unfortunately, those two factors are
\nbeyond the control of the government.<\/p>\n
To get a good crude oil price in the future is very difficult,
\nalmost impossible. Too many factors should be considered. Our
\nrecord shows that the average Indonesia crude oil price was
\n$18.94 per barrel in 1997, and in 1998 the price dropped to
\n$12.35 per barrel. In 1999 the figure rebounded to about $18.
\nSuch a record tells us how crude oil price fluctuated heavily.<\/p>\n
We are also aware that our exchange rate is very sensitive to
\nthe political and economical climate, both domestic and
\ninternational. Hopefully the government's assumptions will not be
\nfar from the actual figures. Otherwise, additional loans will be
\nneeded in order for the government to spend the expenditures as
\nplanned.<\/p>\n
Actually, there is still room for the government to secure the
\noil and gas revenue if it really wants to do it. As we are all
\naware, more than 90 percent of oil and gas production in
\nIndonesia is produced by foreign oil companies (contractors)
\nunder production sharing contract (PSC) terms. Only a small
\nportion is produced by state-owned company Pertamina. Under the
\nPSC terms, in short, we may say that contractors have an
\nobligation to conduct exploration and production of oil and gas.<\/p>\n
If the exploration is successful and production reaches the
\neconomic rate as set forth in the contract then they will get a
\nreimbursement of all their expenditures related to their
\nexploration and production activities. For the capital
\nexpenditures they will get reimbursement through yearly
\ndepreciations, while for noncapital expenditures they will get
\nreimbursement in the same year. Because the government, in this
\ncase Pertamina, will reimburse all expenditures, there is an
\nobligation by Pertamina to verify whether such expenditures are
\neligible for a reimbursement.<\/p>\n
On top of that Pertamina should control contractors in such a
\nway that they conduct operation efficiently. In 1998 total
\nreimbursement was about $3.4 billion. Using an exchange rate of
\nRp 7,000 per dollar, the amount equaled Rp 23.8 trillion.<\/p>\n
If contractors could enhance their efficiency by 10 percent,
\nand I am sure they could, we would get additional revenue of Rp
\n2.4 trillion. To have a better control, it is not necessary for
\nthe government\/Pertamina to involve deeply in the day-to-day
\noperation of the contractors. Instead Pertamina only gives more
\nauthority to contractors and at the same time sets a benchmark
\nfor efficiency. So far, the government\/Pertamina is considered to
\nhave too heavily involved in the day-to-day activities of the
\ncontractors which, to some extent, creates a high-cost economy.<\/p>\n
M SULHAN ASKANDAR<\/p>\n
Jakarta<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/the-2000-state-budget-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }