IPA seeks for revision of GR 79
Tuesday, August 2 2016 - 03:00 AM WIB
?GR 79 is one of the root causes for the lack of interest in new block tender rounds in the past few years,? said Marjolijn Wajong, IPA?s Executive Director in a statement Tuesday.
IPA explained that upstream oil and gas operation is a high risk, high capital and long term investment which requires clear guidance and legal certainty to protect the investment. ?GR 79/2010?s introduction in 2010 significantly changed the taxation and cost recovery governance of oil and gas operation, to the extent that it departed further away from the original spirit and provision of Indonesian PSC terms and created a disincentive for investment,? the statement said.
IPA reiterates the impact of upstream oil and gas sector on Indonesia?s economic growth, the oil and gas sector provides a substantial multiplier effect through energy supply, job creation, income generation, skill acquisition, and social investment. The industry is helping to maximize the value of Indonesia?s energy resources by providing new sources of oil and gas for the economy and its people. Its benefits are significant and lasting.
?We are hopeful that close collaboration with the government will yield substantial and meaningful revision to GR 79/2010,? added the Executive Director of IPA. Several technical aspects of the regulation in taxation and audit principles, cost recoverable governance, risk and liability definition are high on the list for consultation and revision. IPA encourages the government to reinstate assume and discharge principle where this will provide a fiscal certainty for the investor since the investor will only be required to pay income tax upon success of production.
?IPA is striving to support the government to attract investment into upstream oil and gas sector. It is critical to boost exploration to find new reserves to compensate the declining production,? Marjolijn said.
Editing by Reiner Simanjuntak