Govt to provide fiscal incentives for oil, gas exploration

By Godang Sitompul

The government will provide fiscal incentives for production sharing contractors carrying out oil and gas exploration activities in the country in a bid to help ensure future production.

Chairman of SKK Migas Rudi Rubiandini said on Thursday that the incentives include exemption of import duty, and reduction in land and building tax, and income tax.

He explained that the incentives were needed to help bolster oil and gas exploration activities which are crucial to find new oil reserves for future production. He said that the lack of incentives had caused such activities to slowdown, pointing out as an example that out of the targeted 92 wells to be drilled in January of 2013, only 48 have been realized.

Meanwhile, Director General of Oil and Gas, A. Edy Hermantoro said that part of the incentives will include exemption of land and building tax, which has been quite burdensome for production sharing contractors still in the stage of carrying out exploration work as the tax size to be paid is almost the same as the size of their investment commitment.

Significant reduction or exemption of this tax would greatly ease the burden of the PSCs. The tax could then be reinstated when the PSCs have entered production stage, Edy said.

Editing by Reiner Simanjuntak