Indramayu Regency will sue Pertamina if it refuses to pay local tax

The authority of Indramayu Regency in West Java will bring state owned oil and gas company Pertamina?s Processing Unit IV, Balongan to the state court, if the company refuses to pay Rp 46 billion (US$=Rp8,800) in oil and gas processing tax imposed by the local administration for 2003, Bisnis Indonesia reported on Saturday.

Indramayu Regent Irianto MS Syafiudin said on Friday that the oil and gas processing tax was imposed as a compensation for the environmental damage and the loss of natural resources due to the Balongan refinery plant?s operation.

According to him, Pertamina?s production in Balongan reached a total of 123,000 barrels or 18 million liters per day. "We just ask for a compensation of about Rp 5 per liter of the fuel produced by the Balongan refinery plant," he said in Bandung.

The regency?s demand has been submitted to Pertamina for several times but no reply has been made, he said. "When we are still intensively lobbying Pertamina, the ministry of home affairs step in and opposes the tax requirement," he said.

He acknowledged that Pertamina pays taxes amounting to Rp 11 billion but the regent said that the local administration demanded the state owned oil and gas company to pay compensation for the environmental damage and the loss of natural resources in the form of oil and gas processing tax. (*)