Rupiah Becomes Mandatory in Oil, Gas Transactions

The government has stipulated the mandatory use of the rupiah in oil and gas–related transactions, after nine months of delay for settling technicalities.
Before implementing the measure, the Upstream Oil and Gas Special Task Force (SKK Migas) had to classify which transactions to list in Category 1 (obligatory use of rupiah in quotation and payment) and which in Category 3 (optional use of the national currency either partially or both in quotation and payment).
"Transactions such as office rental and salary payment are Category 1, all Rupiah. But for transactions like leasing equipment, if it is still imported and using high technology, the quotation can be in foreign exchange, but the payment must be in Rupiah," SKK Migas’ risk and division head Muhammad Hatta Filsafawan told on Thursday.
He explained that Bank Indonesia (BI) had provided a decade-long grace period for Category 3 transactions. After 10 years, all transactions in Category 3 must use rupiah for both the quotation and the payment.
"But there is a permanent exception for transactions that directly affect the government budget (APBN), such as oil trading. Foreign currencies are allowed to be used for trading oil, both in the quotation and the payment," Hatta said.
The Jakarta Interbank Spot Dollar Rate (JISDOR) had been chosen as the reference quotation, with zero spread, he explained. If there was a need to exchange between US dollar and rupiah, it would be settled within the same day.
"But to speed up the process, we encourage the contractors [K3S] and vendors [K3S suppliers] to open accounts with the same bank," Hatta said.
SKK Migas Deputy of Business Control and Support Rudianto Rimbono added that the agency and 14 vendors, including Chevron, Pertamina, Medco, ConocoPhillips and Petrochina, were in the process of building a Centralized Integrated Vendor Database (CIVD).
"The CIVD makes vendor registration more efficient. Vendors only need to register in one of them to have them registered with all 14 K3S," he said, adding that it would provide information on tenders and projects as well as vendor data on one website.
SKK Migas aims to have all K3S join the CIVD by 2017.
Source:, 26/03/2016
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