SKK Migas to push for increased local content in upstream sector
Tuesday, April 14 2015 - 03:19 PM WIB
The statement was made by SKK Migas? Chairman Amien Sunaryadi during the Indonesia Supply Chain Management (SCM) Summit 2015 in Jakarta on Tuesday.
?One of the plus points of the Production Sharing Contract (PSC) is that the government is present in controlling the operation of the contractors,? Amien said.
SKK Migas has shown its commitment in pushing for an increased role of the national industries in the oil and gas sector by issuing a Work Guideline (PTK) which obliges PSC holders to hire regional firms in procuring goods and services and requires the participation of local companies in the consortiums that provide services to PSC holders.
A research by the University of Indonesia indicates that a spending of Rp 1 billion in the oil and gas upstream sector creates job opportunities for 10 people, increases the national Gross Domestic Product (GDP) by Rp 700 million and the national household incomes by Rp 200 million. In 2014, spending in the upstream sector amounted to Rp 209 trillion. This created job opportunities for 899,000 people, raised the national GDP by 86 trillion and the national household incomes by Rp 23.8 trillion.
In 2004, goods and service procurement commitment in the upstream sector stood at US$17.354 billion with the local content portion (TKDN) reaching 54.15 percent (cost basis), SKK Migas said.
Since 2010, state owned enterprises (SOEs) have been participating in the procurement of goods and services for the upstream sector. In the period of 2010-2014, the value of procurement where the SOEs were involved amounted to $4.51 billion with the TKDN averaging 77.25 percent.
Furthermore, SKK Migas said, since 2009, PSC holders have been obliged to settle payment for goods and services through state or regional government-owned banks. The value of the transactions processed through such banks has reached $44.91 billion. In 2014, the value of transactions processed through the national banks reached $12.43 billion, up 50 percent from $8.195 billion in 2013.
Besides, PSC holders are required to place their Abandonment and Site Restoration (ASR) funds at the state owned banks. As of Dec. 31, 2014, the ASR funds deposited at the banks reached $635 million, up 474 percent from 2009.
SKK Migas?s Deputy of Business Support Control M.I. Zikrullah said SKK Migas expected that the TKDN in the upstream sector will continue to increase in the future.
In order to the increase the participation of the national industries in the sector, SKK Migas will be more active in providing national industry players with information regarding the needs of the upstream sector and providing the PSC holders with information regarding the capacity of the national industries.
Editing by Johannes Simbolon