Indonesia to allow private investors to build oil refineries

Photo: Reuters

Indonesia will let private investors build oil refineries in a regulation to be issued “in days”, its chief economics minister said on Monday.

The move will be the latest in a series to seek to restore investment confidence and revive growth in Southeast Asia’s largest economy.

In recent months, the government has announced measures including tax breaks and lower energy prices to try to stimulate growth, this year at its slowest pace since 2009.

“All this time, refinery projects are always given to Pertamina or for Pertamina and its partners,” Darmin Nasution, coordinating minister for economics, told a press conference, referring to the state energy company.

“In the future, we will open it for private investors, although the refined products must be sold to Pertamina to be distributed to the whole of Indonesia.”

Nasution said as part of the measures to take effect in January, Indonesia will bundle a refinery project with a petrochemical plant to make it more commercially viable.

Investors interested to build oil refineries may ask for tax or non-tax incentives and the government will consider the requests, he added.

Pertamina currently operates four refineries and is working to upgrade one in Cilacap, Central Java, partnering with Saudi Aramco. Saudi Aramco is also looking for further investment opportunities in downstream refining and petrochemical industry.

Cabinet Secretary Pramono Anung said the government aims to speed up the development of refineries in Tuban, East Java, and Bontang in East Kalimantan province.

Pertamina already announced that it was looking for a partner for a greenfield refinery project in Tuban and it will make a selection by January or February.

Getting a refinery in Bontang under way this year was a goal of President Joko Widodo, but it hasn’t happened. The government has previous said it will offer such a refinery, with an expected investment value of 140 trillion rupiah ($10.17 billion), under a public-private partnership scheme.

Also on Monday, the government said it plans to remove import duty for spare-parts for airplanes, beginning in early 2016.

($1 = 13,760 rupiah)

(Reporting by Gayatri Suroyo, Hidayat Setiaji and the Jakarta bureau; Editing by Richard Borsuk)

Also Read:

 Indonesia’s Pertamina, Saudi Aramco to invest $5.5b for upgrading Refinery Unit IV Cilacap

Indonesia state energy firm Pertamina to form JVs with Saudi Aramco, Japan’s Nippon for $10b refinery projects

Indonesia to create Petroleum Fund for financing Pertamina’s upstream, downstream projects

 

 

 

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.