Pertamina plans more deregulation in oil mart

Pertamina plans more deregulation in oil mart

JAKARTA (JP): The president of state-owned oil company
Pertamina, Faisal Abda'oe, proposed yesterday that the government
issue a new deregulatory measure in the oil and gas sector.

"The planned deregulation would include a revision of Law No.
8/1971 about Pertamina and new incentives for oil and gas
investors," Abda'oe said after speaking at a seminar on oil and
gas.

The current law gives Pertamina a monopoly on the processing,
distribution and marketing of oil and gas in the country.

He said the deregulation would allow private investors, both
foreign and domestic, to conduct certain businesses in the oil
and gas sector, which are currently handled only by Pertamina.

Abda'oe said any measure would likely include tax guidelines
on the consolidation of exploration and production activities
undertaken by oil companies.

"The government is now discussing such tax consolidation," he
said.

Meanwhile, Pertamina's director of processing, G.J. Atihuta,
proposed that the government establish a new legal and regulatory
framework to allow private sector companies to invest in the
refining industry and marketing of oil products.

Abda'oe said that such deregulation is a must for Indonesia in
view of increasing competition, especially in the Asia-Pacific
region, to attract foreign investments.

However, Director General of Oil and Gas Suyitno Patmosukismo
said recently that the government was against the tax
consolidation idea, which, it believes, would reduce the
government's earnings from the oil and gas sector.

Suyitno added that he was not sure if tax consolidation would
help promote investment in oil exploration. "I'm not sure if even
the biggest oil producer in the country would boost its
investment in oil exploration," he said in reference to Caltex.

Minister of Mines and Energy I.B. Sudjana also said recently
that the government would not give more incentives to invest in
the oil and gas sector.(04)