Govt may impose tax on windfall oil profit to producers

President Susilo Bambang Yudhoyono renewed his call on the need of the country?s oil and gas companies to share the pain resulting from the surge in oil prices on the state budget during a closed meeting with executives of the country?s major oil and gas companies at the Presidential Palace in Jakarta on Wednesday.

?The country?s oil and gas companies have received windfall profit from the surge in oil prices. There should be a mechanism that they should also share the pain on the severe impact of the oil price increase in the economy,? Energy and Mineral Resources Minister Purnomo Yusgiantoro told reporters following the meeting.

Purnomo said that the most important thing for the government is how to find a solution that could be used to reduce the impact of the rising oil prices on the state budget, but at the same time it would not add a new problem to the oil and gas companies.

He also promised that whatever the solution would be taken by the government, it would not effect the existing contracts with the oil and gas companies.

As the compensation, Purnomo said, the government would ease licensing procedures including for the procurement of equipment for exploration and production activities.

With the cut in the bureaucratic problems, the government is optimistic that the target to produce 977,000 barrels of crude oil per day could be achieved, Purnomo said.

In commenting the government?s plan, the vice chairman of the budgetary committee of the House of Representatives Suharso Monoarfa said that imposing tax on the windfall profit received by the oil and gas companies would be the most reasonable solution.

The government could also introduce oil tax on vehicles owners to help reduce the sharp increase in the government?s fuel subsidy resulting from the surge in the oil prices, he said. (godang)