State Auditors Find Rp 15.9 Trillion in State Losses in the Oil and Gas Sector

The Indonesian Audit Board (BPK)'s Semester Performance Audit Summary (IHPS) for the first half of 2017 revealed state revenue losses of US$1.18 billion, or Rp 15.89 trillion, in the oil and gas sector. These losses were partly due to non-compliance with regulations governing oil and gas revenue calculations.

The largest loss stemmed from improper cost allocation in oil and gas operational cost recovery, amounting to US$956 million, or approximately Rp 12.9 trillion. Further losses resulted from the delayed payment of tax obligations by 17 Production Sharing Contract (PSC) contractors until the 2015 tax year, totaling US$209.25 million. This was compounded by potential state revenue losses from the non-application of minimum tax penalties or interest for the 2015 tax year, amounting to US$11.45 million.

In addition to the losses, the BPK also found weaknesses in internal controls at SKK Migas (Upstream Oil and Gas Regulatory Body). These included suboptimal Standard Operating Procedures (SOPs) and internal supervisory units.