Balikpapan demands Pertamina to pay local tax for its properties

The Balikpapan mayoralty administration in East Kalimantan demanded the state-owned oil and gas company Pertamina to pay some Rp 2.9 billion (US$1=Rp 11,300) in local tax for its various properties at the refinery facilities including building, dock, fences, waste tanks, telephone cable, and pipeline facility, the local Kaltim Post daily reported.

Head of the Balikpapan development agency (Bappeda) Sarjono added that Pertamina must also pay tax for non-PLN street lights. PLN is the state-owned electricity company.

According to the administration, for the period of March 2000-May 2001, Pertamina must pay a total of Rp 1.4 billion in street light retribution fee. Oil and gas firm Unocal and Total must also pay the same tax. Unocal must pay Rp 1.4 billion, while the administration has yet to decide the figure for Total.

Sarjono was speaking to the press following a meeting between the local parliament and Pertamina Balikpapan unit. The local parliament summoned Pertamina to ensure the latter?s participation in financing local development.

The parliament has formed a special team which would provide a political back up to the local administration to collect the so-called third party funds from huge enterprises operating in the mayoralty administrative area.

Pertamina has yet to fully respond to the demand. The company said that it was still calculating its financial condition.

The move by the Balikpapan administration was made following the introduction of the new autonomy law, which gives greater power to local governments in managing their economic affairs.

There has been fears among investors, however, that the local administration would introduce new taxes, which effectively would force companies operating in the local area to pay double taxation both to the central government and the local administration.(*)