Energy & Natural Resources

Tax Treatment for Gross-Split Production Sharing Contracts Finally Regulated
After almost a year after it was originally enforced, the government has finally set an applicable tax treatment for Gross-Split Production Sharing Contracts (GS-PSC) through the issuance of Government Regulation No. 53 of 2017 on Tax Treatment for Upstream Oil-and-Gas Business Activity through Gross-Split Production Sharing Contracts .
Calculation and Payment of Income Tax on First Tranche Petroleum
The Directorate General of Tax has issued Regulation No. PER-20/PJ/2017 on Procedures for the Calculation and Payment of Income Tax on First Tranche Petroleum. Regulation 20/2017 serves is an implementation of Article 25 (13) of Government Regulation No. 79 of 2010 on Refundable Operating Costs and Income-Tax Treatment for Upstream Oil and Natural Gas, which required further regulation in the form of a formula to be used in order to calculate income tax on First Tranche Petroleum (FTP)
Govt. Reregulates PBB Payment Procedures for Oil-and-Gas and Geothermal Businesses
With the overall objective of improving payments of Land-and-Building Tax by oil-and-gas and geothermal businesses through the book-entry mechanism, the Ministry of Finance has issued Regulation No. 131/PMK.03/2017, which sets out a second amendment to Ministry Regulation No. 76/PMK.03/2013 on the Administration of Land-and-Building Tax within the Mining Sector for Oil, Gas and Geothermal Businesses. Prior to the issuance of the Second Amendment, Regulation 76/2013 was previously amended by Ministry Regulation No. 26/PMK.03/2015.
Provisions on the Certification of Horticultural Seeds Redefined
The Ministry of Agriculture has issued Regulation No. 34/Permentan/HR.060/9/2017 on the Second Amendment to Ministry of Agriculture Regulation No. 48/Permentan/SR.120/8/2012 on the Production, Certification and Distribution Supervision of Horticultural Seeds. Regulation 48/2012 was previously amended once through the issuance of Ministry Regulation No. 116/Permentan/SR.120/11/2013.
Supreme Court Puts an End to Water Privatization in DKI Jakarta
The Supreme Court has rendered Decision No. 31 K/Pdt/2017, which settles the citizens’ lawsuit filed by 12 Indonesian citizens, who were being represented by the Rights-over-Water Advocacy Team acting as the claimant. The lawsuit was filed against the government (i.e., the President, Vice President, Ministry of Public Works and Ministry of Finance) and two private companies responsible for the management of the provision of water in the Special Capital Region of Jakarta (i.e., PT Aetra Air Jakarta and PT PAM Lyonnaise Jaya)
Procedures for the Management and Governance of State-Owned Assets within the Upstream Oil-and-Gas Business Sector
In order to implement a more effective, efficient and integrated management of state-owned assets within the upstream oil-and-gas business sector, the Ministry of Energy and Mineral Resources has issued Regulation No. 51 of 2017 on the Management and Governance of State-Owned Assets for Upstream Oil-and-Gas Business Activities.
Government Reregulates Utilization of Natural Gas by Power Plants
In a bid to increase the utilization of natural gas by power plants while ensuring supplies of natural gas for purchase by the electrical power sector at fair and competitive prices, the Ministry of Energy and Mineral Resources recently issued Regulation No. 45 of 2017 on the Utilization of Natural Gas by Power Plants. This new regulation addresses several provisions which pertain to the following matters: 1) Natural-gas supplies for power plants; 2) Natural-gas pricing; 3) Natural-gas distribution tariffs; 4) Natural-gas sale-and-purchase agreements; 5) Natural-gas allocation periods; and 6) The development of power plants which utilize natural gas in their wellheads.
Govt. Introduces Greater Flexibility for Oil-and-Gas Contractors Operating under Gross-Split Production Sharing Contracts
The government is putting a lot of effort into ensuring that oil-and-gas contractors operate under the Gross-Split Production Sharing Contract (GS-PSC) scheme. After witnessing the apparent reluctance of contractors to engage in these contracts however, which are believed to be unfavorable to their businesses, the Ministry of Energy and Mineral Resources has finally issued Regulation No. 52 of 2017, which amends Ministry Regulation No. 8 of 2017 on Gross-Split Production Sharing Contracts. Under this new GS-PSC regulation, the government is offering more attractive contractors’ takes, which were previously set in a more limited sense under the previous regulation.
New Mechanism for Purchase of Electricity from Renewable-Energy Power Plants
In order to create a better investment climate as regards the renewable energy sector, the Ministry of Energy and Mineral Resources has issued Regulation No. 50 of 2017 on the Utilization of Renewable-Energy Resources for the Production of Electricity. This new regulation basically adds one new type of renewable energy which can be utilized for the production of electricity. The regulation also redefines the purchase mechanism for any electricity which is generated by renewable-energy power plants.
Govt. Limits Scope of Recoverable Upstream Investment Costs during Cooperation-Contract Transition Periods
The government has finally clarified the ongoing uncertainty which had prevailed over the exact investment costs which can be recovered at the end of cooperation contracts, as set out under Ministry of Energy and Mineral Resource Regulation No. 26 of 2017 on the Mechanism for the Recovery of Investment Costs for Upstream Oil-and-Gas Business Activities. This clarification takes the form of Ministry of Energy and Mineral Resource Regulation No. 47 of 2017, which has now limited the scope of the investment costs that can be recovered. The new Regulation also includes a provision for newly appointed contractors which describes their responsibility to cover any investment costs which were incurred by previous contractors.
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