New decree in claiming DMO Fee and Under Lifting

SKKMIGAS has issued decree KEP-0095/SKKO0000/2015/S0 dated 5 May 215 (“KEP-95”) regarding The Procedure  of Domestic Market Obligation (DMO) Fee Calculation and Payment Request, Over Lifting Billing, and Under Lifting Amount Payment.

KEP-95 is technical guidance for  Minister of Finance Regulation number 139/PMK.02/2013 (“PMK-139”) regarding Payment Procedure for DMO, Over Lifting Contractor, and/or Under Lifting Contractor in Upstream Oil and Gas Industry.

KEP-95 also formalize existing procedure in claiming DMO and Under Lifting as previously based on Minute of Meeting in 2006.

Below is the flow chart of  DMO Fee Billing and Payment Process under KEP-95

Payment process in accordance with PMK-139 are as follow :

No	Regulated Items	Procedure under PMK No. 139/PMK.02/2013
A
1	DMO Fee Calculation	·   Contractor send DMO Fee Invoice addressed to SKK MIGAS for their reviews and reconciliation purposes; ·   SKK Migas will perform DMO Fee recalculation
2	Offsetting DMO Fee with other items	·   SKK Migas may add/deduct DMO Fee with other items: ü The value of over payment of DMO Fee from previous period; ü The value of overdue Over Lifting; ü The value of over payment of VAT/Luxury Tax reimbursement.
3	DMO Fee Settlement	·    SKK MIGAS send their request payment for all DMO Fee Invoices to Ministry of Finance c.q Directorate General of Budget. ·    Directorate General of Budget shall review request for payment of DMO Fee from SKK Migas; ·    After reviewing, Directorate General of Budget request for payment to Directorate General of Treasury within 10 working days; ·    Directorate General of Treasury shall verify the document and request Bank Indonesia to make payment to PSC Contractors within 7 working days.
B
4	Lifting Calculation	·   SKK Migas calculates lifting entitlement for both Government and Contractors; ·   SKK Migas will determine over/under lifting position for Government and Contractors.
5	Under Lifting Treatment	·   In terms of under lifting position, SKK Migas shall pay under lifting value to PSC Contractors ; ·   SKK Migas may add/deduct under lifting value with other items: ü  The over lifting value  (from prev period); ü  The overpayment value of DMO Invoice from prev period; ü  The overpayment value of VAT/ Luxury Tax reimbursement ·   SKK Migas shall issue procedure for under lifting calculation, under lifting payment request.
6	Under Lifting Settlement	·   SKK MIGAS send their request payment for Under Lifting to Ministry of Finance c.q Directorate General of Budget. ·   Directorate General of Budget shall review request for payment of Under Lifting calculation from SKK Migas; ·   After reviewing, Directorate General of Budget request for payment to Directorate General of Treasury within 10 working days; ·   Directorate General of Treasury shall verify the document and request Bank Indonesia to make payment to PSC Contractors within 7 working days.
7	Over Lifting Treatment / Settlement	·   In terms of over lifting position, SKK Migas shall issue debit note to collect the over lifting value to PSC Contractors; ·   Based on the debit note issued by SKK Migas, PSC Contractors shall pay the over lifting value to Ministry of Finance.

Under PMK-139,   SKK Migas has the right to recalculate for following value: a)      DMO Fee, b)  Over / Under Lifting. Compare to previous regulation, PMK-139 gives authority to SKKMIGAS to offset  DMO Fee settlement with the  Over/Under Lifting  and/or VAT Reimbursement. It also gives authority to SKKMIGAS to offset Under lifting settlement with DMO Fee and/or VAT Reimbursement.