Pertamina may lose its assets

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.