New cost recovery ruling aims to avoid overpayment

By Godang Sitompul

The introduction of a new decree on the guidelines for the suspension of cost recovery payment to oil and gas producers is aimed at protecting the country from the possibility of overpayment, said SKK Migas.

The decree on the ?Guidelines for the Suspension of the Imposition of Operating Cost,? was signed on December 18, 2012 by then SK Migas Chairman Jero Wacik.

?The regulation aims to protect the country from paying more than it should. This mainly relates to operation cost claimed by the PSCs that has the possibility of troubles linked to BPK audit findings or possible criminal case,? SKK Chairman Rudi Rubiandini told petromindo.com.

Contacted separately, Deputy of Financial Control Akhmad Syahroza confirmed the issuance of the new regulation.

?It will be a guideline for the suspension of operation cost claims as the results of auditor findings, of analysis and evaluation on quarterly financial reporting, of evaluation on AFE closed out, and of expenditures whose validity and reasonableness are in doubts from legal/technical/operation aspects stand point,? he told petromindo.com.

Both Rudi and Akhmad refused to elaborate further. A source said that the decree is still being familiarized by all relevant SKK Migas divisions. ?Once that process is completed, the ruling will then be formally distributed to PSCs,? said the source.

Editing by Dadan Wijaksana