Identifying and Modifying the Coal Bed Methane Fiscal Regime in Indonesia: A Comparative Study with the Australia and the U.S.
The research identifies fiscal terms of Production Sharing Contract (PSC) applied to Coal Bed Methane (CBM) in Indonesia and modifying these using comparative examples of the U.S. Royalty/Tax (R/T) System and the Australian Petroleum Resource Rent Tax (PRRT). This research examines the issues of CBM development in Indonesia from the Government of Indonesia (GoI) perspective, investors’ perspectives, consultancies and local community perspectives.
This research involved both primary and secondary data collections. For the primary data collection, the researcher conducted interviews, focus group discussions, and local community surveys to identify the issues of CBM development in Indonesia, as well as obtaining data from government official websites. This thesis also underlines the importance of the local community role in project sustainability and directly engaged with the local communities. Meanwhile, for the secondary data collection, the researcher obtained data from various sources, such as academic journals, professional and consultancy reports, presentation slides available online, official website of some organisations, and books. This research analysed both primary and secondary data qualitatively and quantitatively. The researcher conducted the qualitative analysis mainly by using NVivo software, and the quantitative analysis mainly by using Microsoft Excel.
This research is significant since it compares CBM cost structures and fiscal regimes of three different countries and hence provides as a research contribution this comparative analysis. There are three main conclusions in this research. First, the issues related to CBM development in Indonesia are interconnected one to another. These issues cannot be identified and addressed separately. Second, the main issue relies on GoI, which is the implementation of the government paradigm (Government Regulation No. 79/2014). The GoI should reconsider and reassess the implementation of their paradigm. The paradigm mentions that energy sources should no longer be taken as commodity but for the national engine of growth. Third, there are some fiscal terms that Indonesia could adapt from the U.S. and Australia fiscal systems that could address the issues being identified and create more attractive fiscal regimes for CBM in Indonesia. These are the implementation of the investment credit and ring fence policy in Australia, shared royalty implementation and local tax in the U.S.
Finally, this research has contributed to the academic literature and practitioner perspectives on specific issues related to CBM development in Indonesia. The result has contributed to new knowledge on how the technical and geological conditions can influence the costs of CBM projects. This thesis has applied the interdisciplinary approach of economics and law as well as geology. This research advances lessons from the current fiscal regimes of Royalty/Tax system in Wyoming, and the PRRT system in Queensland. The suggested terms to be adopted address the current challenges which are related to each other. This is part of the international context that can be adopted to the national context, i.e. Indonesia.