Indonesia Sets Higher Oil Production Target for 2015

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  • TEMPO.CO, JakartaThe government and the House of Representatives have agreed to raise the country's oil production target to 900,000 barrels per day from 845,000 barrels set in the original draft budget, as reported by Antara News.

    The increase could potentially mean an addition of Rp11 trillion a year to state revenues before cost recovery, caretaker head of the Fiscal Policy Body of the Finance Ministry Andin Hadiyanto said.

    "Cost recovery is yet to be recalculated . The cost is higher with oil wells getting older. I will have to ask for the data form the SKK Migas (Upstream Oil and Gas Regulator)," Andin said on Monday.

    He said that the finance ministry will recalculate additional revenues to be set in the revised draft state budget because of the change in projection in the original draft budget for 2015.

    In addition to additional income form an increase in oil production, the government is set to optimize tax revenue, contribution from state companies.

    Tax revenues are expected to increase by Rp9 trillion and contribution from state companies to rise by Rp3 trillion.

    State revenues, therefore, would be larger than originally set in the original draft budget, with no much change in spending, Andin said.

    Deficit, therefore is expected to narrow although state expenditures are yet to be recalculated and to be discussed at the parliament, he said.

    The target for total state revenues in the 2015 draft state budget is set at Rp1,762.3 trillion consisting of Rp1,370.8 trillion in taxes, Rp388 trillion in non taxes, Rp3.4 trillion in grants.

    State expenditure target is set at Rp2,019.9 trillion broken down into spending by the central government at Rp1,379.9 trillion and transfers to the regional administrations at Rp640 trillion.

    The deficit, therefore, is projected at Rp257.6 trillion or 2.32 percent of the countrys GDP.