REPUBLIKA.CO.ID, JAKARTA - Kuwait Petroleum Corporation (KPC) likely will cancel its plan to build a refinery processing 300,000 barrels of crude per day worth 90 trillion IDR in Indonesia. Pertamina's director of investment planning and risk management, M Afdal Bahaudin, said on Tuesday that he had already conveyed the governments rejection of the fiscal incentive requested by KPC and, in response, "they have said there is no hope," he added.

He noted that the government could not meet KPCs request because the Kuwaiti request was considered too great. KPC, among others, had asked for a tax holiday for 30 years and a five percent tax afterwards, he said, adding that other companies, meanwhile, pay 20 percent income tax (PPh).

He further said KPC had asked for a reduction in other taxes, such as import taxes and local taxes. The company has finished conducting a feasibility study on refinery development in Indonesia. 

Based on that study, the financial incentive to make the project more economical. The Indonesian government, however, rejected the request, Bahaudin said.

Bahaudin said another refinery investor, Saudi Aramco Asia Company Limited, is currently still reviewing a feasibility study. "They have set a target of finishing the study early in 2014," he said.

Like KPC, Aramco also plans to build a refinery with a capacity of 300,000 barrels per day. It was not yet known, however, what the Saudi government might ask for as an incentive, he added.

The development of the two refineries is expected to reduce the countrys fuel imports, which have continued to rise. Recently, Pertamina manages 11 refineries processing around 1.1 million barrels of crude per day.

The refineries are in Dumai, Riau province, processing 170,000 barrels of crude per day; in Plaju, South Sumatra (118,000 barrels); in Cilacap, Central Java (348,000); Balikpapan, East Kalimantan (260,000); Balongan, West Java, (125,000); Tuban, East Java, (80,000); and Kasim, West Papua (10,000).

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