JAKARTA (TheInsiderStories) – Indonesian government has issued 49 implementing regulations under Omnibus Law Number 11 of 2020 on Job Creation, one of which is in the energy sector. Based on the Government Regulation Number 25 of 2021, the country stated to put zero percent of royalty for downstream coal producers.
Certain treatment in the form of the imposition of a zero percent royalty is impose on the volume of coal used in downstream project activities. Further provisions regarding coal activities, the size, requirements, and procedures will be regulated in a ministerial decree.
End of last year, energy and mineral resources minister, Arifin Tasrif, reiterated the government will provide various incentives for mining, oil and gas players to support the downstream projects and to boost the national productions. The country is targeting to produces one million barrels per day (bpd) of oil and gas and around 12 billion cubic feet of gas per day or 3.2 million barrels of oil equivalent per day by 2030.
The Southeast Asia largest economy also aimed to drive the value added of coal through the coal gasification scheme to become Dimethyl Ether. Beside ease the royalty, the ministry also prepared special coal price formula for the gasification projects and the validity period of the Mining Business License in an accordance with the economic age of the project. For an example, an extension of 10 years from the life of the projects, he adds.
Others is in the form of a tax holiday or corporate income tax, the exemption of value added tax (VAT) for coal processing services to syngas by zero percent. In addition, the exemption from local content engineering procurement construction VAT, the benchmark price for gasification products, the transfer of part of the Liquefied Natural Gas (LNG) subsidy to DME, and the certainty of off-takers or buyers for the downstream products.
While, director general for oil and gas at the EMR ministry, Tutuka Ariadji, said the government in studying to give a number of incentives for oil and gas producer like VAT for LNG projects up to 1 percent. The government also considered to reducers the corporate income tax to make the investment climates better.
Then, he continued, there was an incentives to postpone the postoperative backup fee and will strive an appropriate production split during the pandemic. Through the various incentives, he was optimistic that the investment climate could improve from now was still around 60 percent of this year targets.
End of last year, EMR ministry sees total investment in the energy and natural resources sector only US$22.33 billion in 2020 from 2019 amounting to $31.9 billion due to COVID-19 pandemic. Early of this year, the government optimistic the investment realizations at $36 billion.
For this year, the government optimistic that investment activities in the energy and mineral sectors will rebound to $37.2 billion. He elaborated, the investment in the oil and gas sectors $18 billion, the electricity sector $9.9 billion, the mineral and coal sector $6.4 billion, and the renewable energy at $2.9 billion.
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