Five oil, gas firms owe
$113 million to the state

Five oil and gas firms, including US energy giant ExxonMobil and Kangean Energy Indonesia, owe the state US$113 million in unpaid income tax bills, according to a document.

The document was a paper presented in a meeting between Finance Minister Sri Mulyani Indrawati and  a House of Representatives’ committee on Thursday.

The document said the figures were based on an audit done  by the Development Finance Comptroller (BPKP) in 2008 and 2009, although it said also that further clarification was needed to verify the figures.

The five contractors are ExxonMobil Oil Indonesia Inc, Joint Operating Body (JOB) of Pertamina and Golden Spike Raja Blok, Kangean Energy Indonesia Ltd, Santos UK (Kakap 2) Ltd, and JOB Kodeco Energy Co. Ltd.

According to the document, the largest debtor was Kangean Energy Indonesia Ltd with a total debt reaching US$45 million, which included $30.45 million in unpaid tax and $14.61 million in penalties.

Kangean is conducting activities in a production sharing contract (PSC) under the management control of Mitsubishi Corporation (Mitsubishi) and Japan Petroleum Exploration Co., Ltd (Japex), with Energi Mega Persada Tbk. (EMP) as a partner.

EMP, a subsidiary of PT Bakrie & Brothers, a business conglomerate controlled by the family of Coordinating Minister for People’s Welfare Aburizal Bakrie, controls 50 percent of Kangean’s stake.

The second largest is JOB Kodeco Energy Co. Ltd with a total debt at $32.23 million, which includes $21.78 million of unpaid income tax and $10.45 million in penalties.

ExxonMobil is the third debtor with a total debt of $22.82 million. ExxonMobil’s spokeperson Maman Budiman said the unpaid tax bills were still in dispute.

“ExxonMobil always fulfills its tax obligations. The $22 million you mentioned is still being processed by the tribunal court because there are different opinions about it,” Maman said through a short message.

Efforts to get reponses from Pertamina and EMP were unsuccessful.

Santos UK and JOB Pertamina-Golden Spike have debts of $2.39 million and $10.62 million respectively.

Mulyani said the income tax obligations were stipulated in Indonesia’s oil and gas contracts.
Private contractors must pay income tax based on as much as 48 percent of their gross revenue, while Pertamina’s obligation is only 40.5 percent of their gross revenue.

“As stipulated by regulations, the income tax must be paid by the 15th of the following month at the latest. The contractors must pay interest of 2 percent a month if they are late in this payment,” Mulyani said.

Data from the finance ministry shows that the income tax from the oil and gas sector last year reached  $7.93 billion last year, up from $3.54 billion in 2007.

On her presentation, Mulyani also told lawmakers the government gained profits of Rp 2.06 trillion from subsidized Premium gasoline sales in January.

The profit was obtained because the retail prices during the month were higher than the pricing benchmark using MOPS (Mean of Platts Singapore daily oil price traded).

Mulyani’s hearing completed the series of testimonies both from  government officials and oil and gas industry executives which had been  carried out before the inquiry committee.

The team was set up  in last June in a bid to uncover wrongdoings in the country’s energy industry.

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