Govt prepares tax incentives for CBM investors

The government is preparing tax incentives to attract more investments in exploration and production of coal bed methane (CBM) in the country, a senior government minister said.

Coordinating Minister for the Economy Hatta Rajasa said on Sunday that investors engaged in exploration and production of CBM should be given fiscal incentives because besides being more costly, investment in this mining sector had higher risks.

?Coal bed methane development should not therefore be treated the same as other mining activities,? he said during the inauguration of a rural electricity facility in Banyuasin regency, South Sumatra.

The development of CMB is one of the government?s priorities to cope with the depletion of oil and natural gas reserves. As part of the plan, CMB will be processed into liquefied natural gas (LNG) to meet the gas shortage in many parts of Indonesia especially in Java.

Indonesia is believed to hold CBM reserves of about 337 trillion standard cubic feet which are mostly located in South Sumatra and Kalimantan. Hatta said that in South Sumatra, the CBM reserves were estimated to reach 100 trillion cubic feet .

On Friday, the government announced the winners of the auction of six CBM fields which attracted 12 companies as bidders.

Three of the six CBM blocks including Kapuas I, Kapuas II and Kapuas III, which were won by PT Tranasia Resources-BP Exploration Indonesia, while the other three including Kutai Timur block, which was won by Senyiur CBM Inc. Total E&P Kutai Timur), Kutai Barat block by PT Sugico Graha and Sijunjung block by PT Lion Global Energi-PT Bukit Asam. (*)