Pertamina may lose its assets
Nana Rukmana, The Jakarta Post, Indramayu, West Java
The Indramayu regency administration has told state-owned oil and gas firm Pertamina to pay local oil and gas processing taxes or risk having its assets seized.
"This is our last warning to Pertamina, which has failed to pay its taxes. We will take serious action against the company if it continues to ignores us," Indramayu Regent Irianto M.S. Syafiuddin told the Jakarta Post on Saturday.
Irianto said his administration was prepared to report Pertamina to the State Debt Affairs Agency if the company refused to pay taxes for its operation in Balongan district.
The Indramayu Legislative Council is backing Irianto's efforts to force Pertamina pay local taxes, as required under local Bylaw No. 25/2002. This bylaw, however, has been dismissed by the central government for violating higher rulings.
"As long as the regent's efforts are based on the law, as well as being good for the people of Indramayu, we will offer our support," council speaker Iwan Hendrawan said.
The spokesman for Pertamina's processing unit VI, Suwandi, said his unit could not pay the taxes unless the company's headquarters in Jakarta approved the payment.
"The regent's threat is useless. If the regent wants to get taxes from Pertamina, he should go to Pertamina in Jakarta instead of us," he said.
Suwandi said the company was in compliance with Law No. 8/1971 on Pertamina, which stipulates that 60 percent of the company's net profit goes directly to the central government.
The central government later distributes the money to regional administrations from a general allocation fund.
Since the issuance of Bylaw No. 25/2002, the Indramayu administration has demanded several times that Pertamina pay local taxes on oil and gas processing. The company, however, has failed to respond to these demands.
According to the bylaw, the administration has the right to collect Rp 10 (12 US cents) per liter of oil-based fuel and Rp 5 per liter of gas fuel processed by Pertamina in the regency.
Pertamina's Balongan oil refinery has a processing capacity of 125,000 barrels of oil per day, which is used to supply fuel to Jakarta and along the northern coast of Java.
However, the Ministry of Home Affairs has ruled that the bylaw on local oil and gas processing taxes violates a higher regulation. The ministry has demanded that the Indramayu administration revoke the bylaw.
A number of local administrations, since the implementation of regional autonomy, have issued decrees imposing local taxes on companies operating in their areas.
A senior official in the central government told the local administrations in Riau, East Kalimantan and West Nusa Tenggara on Friday to drop plans to impose an industrial waste tax on local companies. The official said the administrations plan to impose the tax without building waste treatment facilities that can be used by the companies.