Govt encourages more use of domestic products in the oil, gas and electricity sector
Wednesday, October 31 2001 - 02:28 AM WIB
The commitment to increase the use of local products in the energy sector was made possible following a meeting between Minister of Energy and Mineral Resources Purnomo Yusgiantoro and Minister of Industry and Trade Rini M.S. Soewandi met in Jakarta on Tuesday.
"The two ministries have agreed to implement the plan (to increase use of domestic products in the oil and gas sector) by establishing the Energy and Mineral Resources Forum," Purnomo said.
The objective of the forum was to increase the use of local products in engineering, procurement and construction (EPC) in the oil and gas sector.
"To achieve that, there will be at least one ministerial meeting (involving ministers of energy and industry) in six months and one echelon I-level meeting (senior official meeting) between the two ministries in every three months to evaluate the EPC system," Purnomo said.
In addition, the two ministers also agreed to increase the use of local products in the electricity sector.
Purnomo contended that the use of local products in the electricity sector was still lower compared in the oil and gas sector.
In the oil and gas sector, there was a requirement for production sharing contractors (PSC) to use local products, at least 30 percent of all their EPC needs, while in the electricity sector, there are no rules that could force independent power producers to use local products.
Nevertheless, Purnomo considered PSC spending to buy imported products was still too high. As illustration, PSCs in the country spent around $5 billion per annum, of which $3.5 billion for production and $1.5 billion for exploration.
Of that amount, 30 percent was spent in the domestic market, but not all would end up with domestic products.
"With this program, it is expected that domestic content would be further increased," he said. (*)