Incentives for refinery development pending Finance Ministry approval

The ministry of energy and mineral resources has completed the drafting of incentives for the development of new oil refineries, but the fiscal facilities would still need approval from the finance minister, Kontan reported Friday.

Pertamina?s processing director Rukmi Hadihartini said in Jakarta on Thursday that the incentives recommended by the director general of oil and gas would be strong enough to encourage investors to enter the construction of the highly cost refineries in the country.

Rukmi hoped that the finance minister would soon approve the incentives so that they could be soon implemented.

Oil and Gas Director General Evita Herawati said earlier that the incentives would include exemption of import duties on capital goods needed for oil refinery construction; exemption of sales tax for refinery catalysts and components; as well as the government?s bank guarantee.

According to her, such fiscal incentives will be able to reduce the cost for the construction of new oil refineries which is often considered too expensive and not economically feasible for investors. (*)