Ministry of Trade mulls exempting oil, gas from L/C requirement
Tuesday, March 10 2015 - 07:23 AM WIB
The Ministry of Trade is mulling to exempt oil and gas producers from the newly-issued Minister of Trade Regulation No. 4/2015 on the L/C requirement, the ministry?s Director General of Foreign Partogi Pangaribuan said on Tuesday.
The regulation, which obliges producers of minerals, coal, oil, and gas to use L/C issued by Indonesian banks, will be effective on April 1, 2015.
"We have received letter from the Ministry of Energy and Mineral Resources regarding their reservations about the regulation. We will thus review this L/C requirement for gas, LNG products, in particular," said Partogi during a conference held by Petromindo on Tuesday.
He admitted though, prior to the issuance of the regulation, his department had not received any inputs from Ministry of Energy and Mineral Resources.
The regulation was issued in January principally to gain correct data on the exports of commodities as there have been reports that many coal and mineral miners have been operating illegally and exporting their products illegally.
The regulation has drawn protests from the oil and gas industry. The Indonesian Petroleum Association (IPA) said the regulation will unnecessarily add costs and most oil and gas contractors have long term contracts with payment and credit terms, generally via a Trust Account, that have been agreed and approved by the parties. If the government insists on the implementation of the regulation on the oil and gas industry, it will result in operation shutdown in companies which are not able to comply it.
Editing by Johannes Simbolon