Pertamina, finance ministry making TOR for refinery project
Friday, January 3 2014 - 03:18 AM WIB
State owned firm PT Pertamina (Persero) and the finance ministry are preparing the terms of reference (TOR) for the international auction of a public-private partnership (PPP) refinery project to be held in early 2014.
"The TOR has not been completed. Currently the team is completing the Feasibility Study. The work will be targeted to be completed at the end of the year," said Corporate Communications Vice President of Pertamina, Ali Mundakir, in Jakarta.
Ali said the government should not be hesitant to give fiscal incentives to foreign companies that intend to build a refinery in the country.
"Companies who want to build refinery deserve fiscal incentives from the government since refining business requires a huge investment while the return on the investment is low," he said.
Before deciding on the incentives for refinery projects and the TOR of the auction, the government is making comparative studies on what has happened to similar projects in other countries.
Based on data collected by Pertamina, countries such as Thailand, Vietnam, India, China and Brazil provide many incentives to investors who intend to build a refinery in fiscal, licensing and financial terms.
The Indonesian government has been committed to build three new refineries in order to reduce oil product imports by 900,000 bopd in 2018.
The government has established two funding schemes for refinery projects, either the budget to be sourced from the state budget or from PPP funds.
Editing by Johannes Simbolon