KS Energy complaining about import duty imposed on drilling rig

By Ruli Setiawan

SGX-listed KS Energy is complaining about the import duty imposed by the custom authorities on its drilling rig brought into Indonesia.

The firm said in a statement on Thursday that PT Java Star Rig (JSR), held by a joint venture company of KS Drilling Pte Ltd, has received notice from the Ministry of Finance of the Republic of Indonesia ?s Directorate General Customs and Excise (DGC) that the importation of the jack-up drilling rig named the KS Java Star was not in accordance with certain terms of the importation permit and customs duty exemption facility issued by the Indonesian Investment Coordinating Board (BKPM) and therefore not exempted from import duty.

The permit was granted to JSR in Q4 2012 by BKPM prior to the importation of the rig into Indonesia.

In reviewing the case, DGC concluded that the implementation of the permit granted to JSR by BKPM was not in accordance with the terms of the permit and therefore assessed that import duty and fines totaling Rp 197.0 billion (approximately S$20.5 million based on the exchange rate of S$1.00 to Rp 9,600) are due and payable by JSR. As a result, a customs bond arranged by KS Drilling has been called upon to settle the amount.

KS Energy said the import duty and fines will negatively impact the net result for the full year ended Dec. 31, 2015.

JSR is currently reviewing the decision of the DGC with their legal advisors and plans to file an appeal at the Indonesian tax court.

KS Drilling, an 80 percent-owned subsidiary of KS Energ, is an investment holding company. The main activities of its subsidiaries are in the provision of onshore and offshore drilling services, rig management and support services, oilfield equipment ownership and leasing.

Editing by Johannes Simbolon