Reporter: Andri Indradie, Arsy Ani Sucianingsih, Tedy Gumilar | Editor: Rizki Caturini
JAKARTA. Broadcast message was circulating, Thursday (1/12), among oil and gas bosses. The message was titled Gross Split PSC vs Traditional PSC in Indonesia. The author’s identity remains unclear. But the message discussed the positive and negative sides of the implementation of gross split mechanism.
No one claimed to have written the message. However, it was circulated rapidly in only one day after a working meeting between the Minister of Energy and Mineral Resources Ignasius Jonan withe the Commission VII of DPR (House of the Representatives or Parliament), Tuesday (22/11).
During the meeting, Jonan said the government will implement the gross split system under the scheme of production sharing contract (PSC). The implementation will remove the cost recovery.
Thus, cost recovery is part of PSC mechanism, of which the contractor bails out the exploration and exploitation costs in a working area. Furthermore, the contractor (KKKS) will regain the costs after the commercial production. After deducting the cost recovery, the government will subsequently share the profits, with the composition on 85% and 15% for government and the contractor (KKKS), subsequently.
The profit sharing will be easier without the gross split. The government also does not need to deal with cost recovery, which always becomes the burdensome for the State Budget from year after year.
Coordinating Ministry of Economic Affairs is formulating the points of the changes in PSC mechanism and the implementation of gross split. Subsequently, the points will be released under the Minister of Energy and Mineral Resources Regulation. However, Jonan refused to mention the details of the new points. Special Working Unit for Upstream Oil and Gas Business Activities (SKK Migas) also still do not have information related to the new points
However, the Secretary of SKK Migas Gde Pradnyana predicted that the issue of cost recovery always heats up when the government and DPR discuss the State Budget as a burden. However, on the other hand, SKK Migas considers the cost recovery as an investment form. “These two sides often fail to reach an agreement,” said Gde.
Indeed, Jonan was upset, since Supreme Auditor (BPK) found that the contractor (KKKS) has been misusing the regulation to claim a number of costs, which are not supposed to be included as cost recovery. This has been occurred repeatedly.
The report of BPK dated on 26 March 2016 mentioned that KKKS had misused Rp 4 trillion cost recovery. This was the result of BPK’s audit in 2014 in only seven working areas. The result of BPK audit during 2009-2012 also shows some other abuses. In the semester I & II 2012, seven operators or KKKS have created US$ 37.86 million and US$ 52.47 million potential state losses
Not surprisingly, Minister Sri Mulyani has summoned Head of SKK Migas Amien Sunaryadi related to this matter. The oil and gas sector seems to be extravagant, as the costs recovery include costs for travelling with luxurious services, luxurious office building. “Even, patching teeth has to be in New York,” he said. As the result, in the future the government will no longer reimburse expenses spent by KKKS.
Therefore, Executive Director of Reforminer Institute Komaidi Notonegoro said, automatically, there will be no longer supervision over the cost recovery. In this case, KKKS will take full responsibility over the cost recovery.
However, what if no one wants to be ‘the driller’ of oil and gas in this land?
(Muhammad Farid/Translator)
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