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Gross-split expected to make assets management more efficient
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An illustration for oil field in Blora, Central Java (kompas.com/File)
T
he government has reiterated the importance of using the new gross-split scheme to make upstream oil and gas sector more efficient as it will not have to manage the assets contractors buy and use during their operations in Indonesia.
Under the old cost recovery scheme, the government is responsible for reimbursing contractors’ exploration and exploitation expenses from the state budget, including for the procurement of various heavy equipment.
The government will later decide whether to sell back such equipment to the original vendor, put them up for auction or allow other contractors to use them.
Throughout 2016, the government held 35 auctions for various assets formerly used by oil and gas contractors and was able to collect Rp 25.5 billion (US$1.9 million) in non-tax revenue (PNBP), up 18.7 percent compared to Rp 21.49 billion from 36 auctions in 2015.
“This has been one of our considerations to encourage the implementation of gross-split scheme, through which the assets bought by contractors will be owned and managed by contractors as well, not by the country,” Energy and Mineral Resources Minister Ignasius Jonan said recently.
He specifically mentioned the Ardjuna Sakti floating storage and offloading (FSO) vessel, which was initially bought by a contractor in 1975 with a price of Rp 491.7 billion.
The government plans to immediately put the vessel up for auction as the facility currently has no use and only weighs on the state budget with a docking cost of around Rp 7.8 billion a year.
