Govt to offer incentives for development of CBM gas

The government plans to offer fiscal incentives to encourage the development of coal bed methane (CBM) gas as an alternative energy to replace oil fuel, Investor Daily reported on Thursday.

"The new incentives are being assessed. Hopefully, we will be able to issue a regulation on the incentives within a month from now," said Minister of Energy and Mineral Resources Purnomo Yusgiantoro.

The minister said that the incentives would include a tax reduction for up to five years during exploration period, and cost of recovery for all the costs spent by investors exploration and production activities or set a rate of return (ROR) up to 20%.

The minister said that the incentives would be possible thanks to the change in the management and supervision of the CBM gas. At present, the exploration and production of CBM gas is under the control of the directorate general of oil and gas. Before the change, the CBM was under the directorate geology and mineral resources.

According to Punomo, Indonesia has CBM gas reserves of

about 453 trillion cubic feet. (*)