Govt urged to seek share in foreign oil companies` windfall profits
Jakarta (ANTARA News) - The Indonesian government should ask for a share in the windfall profits multinational oil companies operating in Indonesia have gained from the continuing world crude price spiral, a national oil and gas industry spokesman said.
"The extra income the state could earn from the windfall profits foreign oil contractors have enjoyed by the world oil price hikes is estimated at Rp26.5 trillion," Effendi Sirajuddin, chairman of the National Gas and Oil Companies Association (Aspermigas), said here Wednesday.
He said the state`s additional revenue from the windfall profits could be used to assist ordinary people affected by the impact of the planned domestic fuel oil price increases.
The figure of Rp26.5 trillion was derived at assuming the foreign oil companies produced 1.0 million barrels per day (bpd) or 630 million barrels per year. With the basic price of their output set at US$70 per barrel but the actual world market price having risen to US$110 per barrel there was a margin of US$5.8 billion, or about Rp53 trillion.
If a 44-percent double tax was imposed on the windfall profits, Indonesia would collect some Rp23 trillion.
"If the proceeds are divided 50:50, the government would get a share of Rp26.5 trillion per annum. And thereafter, if the oil price rises further, the government`s share will also increase further," he said.
He said windfall profits were additional gains obtained by the contractors, not income from additional investment.
The profits were earned due to price hikes which were expected to increase further in the coming days, he said.
"If additional income is earned without hard work it is only fair if the government asks for a share, one-third or half of it to assist the poor, to cover its food subsidy, to fund education or health," he said.
He said the government should not hesitate to ask for a share in the windfall profits because this was also done in other countries, including the United States and Venezuela.
The United States had been enjoying windfall profits even before the world crude price reached US$100 per barrel.
"When the price reached US$124 per barrel the US government and Congress immediately asked for an increase in the state`s share in oil companies` windfall profits," he added.(*)
"The extra income the state could earn from the windfall profits foreign oil contractors have enjoyed by the world oil price hikes is estimated at Rp26.5 trillion," Effendi Sirajuddin, chairman of the National Gas and Oil Companies Association (Aspermigas), said here Wednesday.
He said the state`s additional revenue from the windfall profits could be used to assist ordinary people affected by the impact of the planned domestic fuel oil price increases.
The figure of Rp26.5 trillion was derived at assuming the foreign oil companies produced 1.0 million barrels per day (bpd) or 630 million barrels per year. With the basic price of their output set at US$70 per barrel but the actual world market price having risen to US$110 per barrel there was a margin of US$5.8 billion, or about Rp53 trillion.
If a 44-percent double tax was imposed on the windfall profits, Indonesia would collect some Rp23 trillion.
"If the proceeds are divided 50:50, the government would get a share of Rp26.5 trillion per annum. And thereafter, if the oil price rises further, the government`s share will also increase further," he said.
He said windfall profits were additional gains obtained by the contractors, not income from additional investment.
The profits were earned due to price hikes which were expected to increase further in the coming days, he said.
"If additional income is earned without hard work it is only fair if the government asks for a share, one-third or half of it to assist the poor, to cover its food subsidy, to fund education or health," he said.
He said the government should not hesitate to ask for a share in the windfall profits because this was also done in other countries, including the United States and Venezuela.
The United States had been enjoying windfall profits even before the world crude price reached US$100 per barrel.
"When the price reached US$124 per barrel the US government and Congress immediately asked for an increase in the state`s share in oil companies` windfall profits," he added.(*)