If 50% of profit taken by the government, it would affect production: Purnomo

The crude oil output target of 1.32 million barrels for 2002 budget year has to be revised down if the government has to take 50 percent of net profits booked by state oil and gas company Pertamina, from the previous 10 percent, as the crude output projection was made based on the assumption that Pertamina would retain 90 percent of net profits.

Minister of Energy and Mineral Resources Yusgiantoro said that he does not yet know the number of investment plans and programs that needed to be scrapped because of the increased dividend.

"There are ongoing exploration programs ... and we do not know if we can continue those, we have to consult first with Pertamina on this," he said.

Purnomo said the government's proposal to the House to increase the dividend payment from Pertamina to the government to 25 percent from the previous level of 10 percent was based on its intensive consultation with Pertamina.

It means that the government has pursued a "bottom-up" mechanism in its decision regarding dividend payment from Pertamina, by asking the state oil company how much dividend it could submit to the government.

However, after the House decided that the government must get 50 percent dividend, the government would then be required to pursue a "top-down" mechanism in the decision, by telling Pertamina that it wanted 50 percent of the net profit.

Nevertheless, Purnomo said the government had not yet given its final approval to the House?s demand, as it had to be consulted with other economic ministers and the coordinating minister for the economy. (*)