Govt sets up team to accelerate refinery construction

The government has set up a special team to accelerate the construction of domestic refineries to process crude oil into fuel products, reports said on Tuesday.

Vice Minister of Energy and Mineral Resources Susilo Siswoutomo said that the special team will provide technical recommendation on refinery project to the government.

The inter-department team will be led by the Ministry of Energy and Mineral Resources, while members will include the Ministry of Finance, the Office of the State Minister of State-Owned Enterprises, Ministry of Industry, National Development Planning Agency (Bappenas), and the state-owned oil and gas firm Pertamina.

The government has planned to build a refinery with a capacity of 300,000 bpd to be funded by the state budget. The project will be either located in Arun (Aceh), Bontang (East Kalimantan), or in Plaju (South Kalimantan).

Meanwhile, Afdal Bahaudin, Director of Management Risk and Investment Planning at Pertamina, said that Saudi Aramco and Kuwait Petroleum Corp (KPC) have dropped their plans to develop refineries in Indonesia as the government turned down their request for tax incentives.

The Ministry of Finance considered the requested tax incentives as too excessive including an exemption of import duty during the construction process.

Aramco in cooperation with Pertamina initially planned to build a refinery in Tuban, East Java, while KPC planned a similar project (also in cooperation with Pertamina) in Bontang, East Kalimantan.

Susilo said that the government will look for new partners to develop the refineries. ?We?re opening opportunities for other parties,? he said. (*)