Pertamina revives plan to build new refinery

State-owned oil and gas company Pertamina is waiting for tax incentives from the government to revive its plan to build new refinery plants, Kompas daily reported on Monday.

Suroso Atmomartoyo, Pertamina?s director for fuel processing said in Jakarta last week that the incentives were needed because the current rate of investment return was still too low for investors.

With the current interest rate of between 8 and 9 percent, the rate of investment return should reach between 12 and 14 percent in order to attract investors to build new refinery plants, he said.

He said that Pertamina?s president director Ari H Soemarno had formally submitted the request for the tax incentives to the government but no response had so far been received by the company.

Pertamina has reached an agreement with foreign investors including Sinopec of China to build a new refinery plant in Tuban, East Java and with Kuwait Petroleum Company to build another refinery plant in Selayar in South Sulawesi.

Earlier, Suroso said that Pertamina needed more than one partner to materialize its plan to develop the Tuban oil refinery with an estimated investment of between US$2 billion and $3 billion.

But the construction of the refinery plants which would increase fuel refinery capacity by about 200,000 barrels per day have been delayed due to an increase in the construction costs.

Meanwhile Pertamina?s president Ari H Soemarno said that Pertamina booked a net profit of about Rp 19 trillion ($2.1 billion) in 2006, an increase of about Rp 3 trillion from the previous year. About Rp 9.47 trillion of the totals would be paid as dividend to the government.

In addition to the dividend, Pertamina last year paid about Rp 92 trillion in non tax payment and Rp 27 trillion in tax payment to the government. With the dividend, Pertamina's contribution to the state revenues reached about Rp 128.47 trillion last year, he said. (*)