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GOVERNMENT REGULATIONS                                      

THE UTILIZATION OF DOMESTIC PRODUCTS IN UPSTREAM  OIL AND

NATURAL  GAS BUSINESS ACTIVITIES

(Regulation of the Minister of Energy and Mineral Resources Number  15  Year  2013  dated  February 22,2013)

BY  GRACE  OF GOD  THE  ALMIGHTY THE MINISTER  OF ENERGY  AND MINERAL

RESOURCES OF THE REPUBLIC OF INDONESIA,

1. Law Number 22 Year 2001  on  Oil  and  Natural Gas (Statute Book of the Republic  of  Indonesia Year 2001 Number 136, Supplement to Statute Book  of  the Republic  of Indonesia 4152);

Considering :                                                                     2.   Law Number  22  Year  2007  on Investment (Stat-

1. in  order  to  implement  the  provision  of  Article 3                ute Book of  the  Republic of  Indonesia Year 2007 letter  d,  Article  11 paragraph  (31 letter o, Article        Number  67,  Supplement  to  Statute  Book  of the

40  paragraph  (4),  and Article 42  letter  h of Law                 Republic  of  Indonesia 4724);

Number  22  Year  2001  on Oil and Natural Gas, it       3.   Government Regulation Number  35  Year 2004 on is necessary  to  prioritize to  the use   of domestic                Usptream Oil and Natural Gas  Business Activities products  in  every  activity  of  the procurement  of  (Statute Book  of  the  Republic  of Indonesia Year goods  and/or  service in  usptream  oil and natural         2004  Number  123,  Supplement  to Statute Book gas business activities;                                              of  the  Republic  of  Indonesia  Number   4435) as

1. in  order to  optimize the prioritization of the use of                already  amended twice and the  latest by Govern- domestic  products, it  is necessary  to regulate the    ment  Regulation  Number  55  Year 2009 (Statute utilization   of   domestic   products   in  usptream   oil   i   Book   of   the   Republic   of   Indonesia   Year   2009 and gas natural  gas business activities;              Number  128, Supplement  to  Statute Book  of the
2. having regards  to  letters  a and b,  it is necessary                Republic  of Indonesia Number 5047);

to stipulate a regulation  of  the Minister  of Energy          4.   Presidential   Regulation   Number   28 Year  2008 and  Mineral  Resources  on  the  Utilization of Do-         dated  May  7,2008  on National Industry Policy; mestic  Goods  in  Upstream  Oil  and Natural Gas 5.   Presidential  Regulation  Number  9  Year 2013 on Business Activities;                                                       the  Execution  of  Upstream  Oil  and  Natural Gas

Business  Activities  (Statute Book of  the Republic

In view of:                                                                              of  Indonesia  Year  2013 Numbet 24};

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GOVERNMENT REGULATIONS

1. Presidential Decree Number 59/P Year 2011 dat­ ed  October  18, 2011;
2. Regulation of the Minister of Energy and Mineral Resources Number 037 Year 2006 dated June 6,2006 on Procedures for Submitting Plan for the Import and Settlement of Goods Used for the Op­ eration of Usptream Oil and Natural Gas Business Activities;
   1. Regulation of the Minister of Energy and Mineral Resources Number 27 Year 2008 dated August 22,2008 on Supporting Oil and Natural Gas Busi- , ness  Activities;
      1. Regulation of the Minister of Energy and Mineral Resources Number 18 Year 2010 on Organization and Working Mechanism of the Ministry of  En­ ergy and Mineral Resources (State Gazette of the Republic  of Indonesia  Year 2010 Number 552);
         1. Regulation of the Minister of Energy and Mineral Resources Number 09 Year 2013 on Organization and Working Mechanism of the Special Execu- tiveWorking Unit of Usptream Oil and Natural Gas Business Activities  (State Gazette of  the Republic of Indonesia  Year  2013 Number 194);

DECIDES:

To stipulate: THE REGULATION OF THE MINISTER OF ENERGY AND MINERAL RESOURCES ON THE UTILI- ZATION OF DOMESTIC PRODUCTS  IN  USPTREAM OIL  AND NATURAL  GAS  BUSINESS ACTIVITIES

CHAPTER I GENERAL

Article 1

Referred  to  in this ministerial  regulation as:

1. Usptream Oil and Natural Gas Business Activity shall be an business activity focused or relying on business activity of oil and natural gas exploration and exploitation.
2. Domestic product shall be goods and/or service, i including design and engineering produced and worked   by   companies   investing   and   producing in Indonesia,  which  are  possible  to  use  imported raw   materials/components  in   the   production   or the work
   1. Local Content hereinafter abbreviated to  TKDN shall be the quantity of domestic components in goods, service and combination of goods and ser­ vice,  which  is certified in percentage.
   2. Contractor shall be business entity or permanent establishment stipulated to undertake exploration and exploitation in a working area on the basis of production sharing contract with the Special Ex- ecutive Working-Unit of Upstream Oil and Natural Gas Business Activities.
   3. Domestic Producer shall be business entity or in­ dividual having business  activity  established on the basis of Indonesian law and producing domes­ tic productsi.
      1. Supplier of goods and/or provider of service shall be a business entity or individual  having capability

of providing goods and/or service in the  interest in

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GOVERNMENT REGULATIONS

accordance with the business line and qualifica­ tion thereof.

1. The Special Executive Working Unit of Usptream Oil and Natural Gas Business Activities shall be a working unit executing the management of usp­ tream oil and natural gas business activities under the fostering, coordination and supervision of the Minister of Energy and Mineral Resources.
   1. Letter of Capability of Supporting Oil and Natural Business hereinafter called SKUP Migas shall be

a letter granted to company or individual having i, capability of  producing  domestic  goods  and/or service on the basis  of  result of  study  and evalua­ tion of concrete capability, covering legal aspect,  1 such as business and financial status,  technical aspect such as production capability and manage- i ment system, aspects of marketing network and after-sales service

1. Domestic Product Appreciation Book hereinafter called  APDN  Book  shall  be  a  book  containing  list of goods, list of service providers and list of ca- ' pability of domestic producers already  securing  1 SKUP Migas.
2. Verification shall be an activity to match the ac­ complishment of TKDN by domestic producers and/or suppliers of goods and/or providers of ser­ vice with the data obtained or colected from busi­ ness activities of the domestic producers and/or 1 suppliers of goods and/or providers of service.
   1. . Work  Plan  and  Budget  shall  be a plan of annual

activity  and budgetary  expenditure  of contractor

in a working area.

1. List of Procurement Plan shall be a lost of the plan for the purchase of  goods and services  contained in the  work  plan and budget.
2. Price Preference shall be an adjustment value or normalization of the price against bid price in the procurement  of  goods  and/or service.
3. Domestic Component in Goods shall be the  use of raw materials, design and engineering contain­ ing substance of manufacturing, fabrication, as­ sembly and finishing of work resulting from and executed in the country.
   1. Domestic Component in Service shall be the use of service up to the final delivery by utilizing man­ power, including specialist, working appliance, in­ cluding software and supporting facilities result­ ing from and executed in the  country.
   2. Domestic Component in Goods and Service shall be the use of materials, design and engineering containing substance of manufacturing, fabrica­ tion, assemly and finishing as well as the use of service by utilizing manpower, including special­ ist, working appliance, including software, and supporting facility up to the final delivery result­ ing from and executed in the country.
   3. Factory overhead cost shall be indirect costs of manpower, mechine/working appliance/facility and the  whole  other  fabrication  costs  needed to produce an unit of product with the cost not chargeable directly to specified product
      1. Company  overhead  cost  shall be costs  related to

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GOVERNMENT  R!cGULATIONS

the marketing, administration and general affairs cost of the company.

1. Output Tax shall be value added tax payable, which shall be collected by taxable entrepre­ neurs delivering taxable goods, providing taxable service, exporting tangible taxable goods, intan­ gible taxable goods and/or exporting taxable ser­ vice
2. Domestic Company shall be state-owned busi- ness entity, regional administration-owned busi­ ness entity, private business entity wherein over 50% (fifty percent) of the share is controlled by state-owned busines entity or regional adminis­ tration-owned business entity having voting right and established in accordance with legislation as well as working and domiciled in the territory of the Republic of Indonesia

21 . National company shall be private business entity wherein over 50% (fifty percent) of the share is controlled by foreign company or foreign  citizen and which is established in accordancew with legislation as well as  works  and  is  domiciled  in the territory  of  the Republic  of Indonesia.

1. Foreign company shall be a business entity estab­ lished and having legal entity outside the territory of the Republic of Indonesia and obliged to abide by the effective legislation in the Republic of In- donesia.
   1. Directorate General shall be the Directorate Gen­ eral having task  to  formulate  and implement te-

chical policy and standardization in the field of oil

and natural gas.

1. Director General shall be the Director General having task to formulate and implement techical policy and standardization in the field of oil and natural gas.
2. Minister shall be the minister in charge of oil and natural  gas affairs.

Article 2

The regulation of the utilization of domestic product  shall  be intended to:

1. support and boost the growth of domestic prod- ucts so as to be able to support usptream oil and natural gas business activities and contribute added value to economy, absorb manpower as well as have national, regional and international competitiveness;
2. support and boost the growth of innovation/tech- nology of domestic products;
3. increase the use of domestic products in upstream oil and natural gas business activities by consider- ing the principles of effectiveness and efficiency; and
   1. realize operational order in  the  enhancement  of the use of domestic products in usptream oil and natural  gas business activities.

CHAPTER II

DOMESTIC  PRODUCT  UTILIZATION POLICY

Part One Target  of TKDN

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Article 3

(1)          )   In   supporting   the   domestic   product utilization policy, the target of TKDN in the usptream oil and natural gas business activities shall be set as contained in Attachment I, which constitutes an integral part of this ministerial regulation.

(2)          In order to achive the target of TKDN as meant  in paragraph (1), the Director General shall stipu­ late a roadmap of the accomplishment of  target of TKDN in the upstream oil and natural gas busi­ ness activities.

Article 4

(1)    Every contractor, domestic  producer,  and  suppli­ er of goods and/or provider of service procuding goods and/or service in usptream oil and natural gas business activities shall be obliged to use, maximize and empower domestic  goods,  service as well as engineering and design potentials ful­ filling the quantity, quality,  delivery  time  and price in accordance with the provision in the procure­ ment  of  goods and/or service.

(2)   The procurement of godos and/or service shall be obliged to use APDN Book as a reference to stipu­ late strategy of the procurement as well as deter­ mine requirements and provisions on the procure­ ment.

(3)   The' APDN Book as meant in paragraph (2)  shall be issued periodically by the Directorate General, which  contains  at least:

a. list  of   goods  belong  to   the   required, maxi-

mized  and  empowered category;

1. list of service providers belonging to the prior­ itized, maximized and empowered category; and
2. list of capability of domestic producers of goods and/or providers of service already se­ curing  SKUP Migas.

(4)    Further provision on the APDN Book as meant in paragraph (3) shall be stipulated by the Director General.

Part Two

Task and Responsibility Article 5

( 1 I  In  a bid  to  prioritize  to  the use of  domestic prod­

ucts, the Directorate General shall be obliged to:

1. examine and evaluate capability of domestic products in the framework of issuing SKUP Migas;
2. issue  and renew  APDN Book periodically;

1. qualify companies and individuals to undertake verification; and
2. supervise the utilization of domestic goods, service, technology and design and engineer­ ing  capability.

(2)  If necessary, in order to ascertain that the produc­ tion of goods and/or service is really executed by domestic producers, the Directorate Genera may witness the production of domestic goods and/or

seN,ce ordered by  contractors.

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Article 6

In a bid to prioritize to the use of domestic product, the Special Executive Working Unit of Usp­ tream Oil and Natural Gas Business Activities shall be obliged to:

1. stipulate the target of TKDN  that contractors have to be accomplished in every work plan and budget  and/or  list of  procurement plan;
2. foster contractors to fulfill the accomplishment target of the use of domestic products mentioned in work plan and budget and/or list of procure­ ment plan;
3. provide information which may be ascertained by the public with regards to the plan for the pro­ curement of domestic goods and/or service in the usptream oil and natural gas business  activities; and
   1. coordinate contractors in a joint effort to increase the use of domestic goods and/or service.

Article 7

In a bid to prioritize to the use of domestic products, contractors shall be obliged to:

1. require maximally the production of goods and/or service in the country;
2. stipulate technical specification of goods and/or service by referring to APDN Book;
   1. stipulate the target of TKDN that has to be ac­ complished in the procurementof goods and/or service;
      1. conduct verification in order to determine the  ac-

!

complishment of TKDN in the implementation of the procurement contract of goods and/or ser­ vice; and

1. submit report on result of the verification of the accomplishment of TKDN to the Directorate Gen­ eral and the Special Executive Working Unit of Usptream Oil and Natural Gas Business Activities.

Article 8

(1)    In a bid to prioritize to the use of domestic prod­ ucts, domestic producers and/or suppliers of goods and/or providers of service shall be obliged to:

1. fulfill the quality, delivery time and price in accordance with the provision in the procure­ ment contract of goods and service;
   1. fulfill committment to the self-assessment TKDN of service stipulated in the procure­ ment contract of goods and/or service;
   2. enhance TKDN of the produced goods and/or service, which is declared in the committment to the plan for the enhancement of TKDN of goods and/or  service; and
   3. submit report on the production capacity of goods and/or service to the Directorate Gen­ eral every 6 (six) months.

(2)    Besides the obligation as meant in paragraph (1), domestic  producers  shall be obliged to:

1. have SKUP Migas,  which remains  valid; and

1. undertake  production process in  the  country;

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1. fulfill! TKDN of goods in accordance with the value mentioned in certificate of TKDN.

CHAPTER Ill PRICE  PREFERENCE

Part One

TKDN-Based Price Preference Article 9

(1 ) In  the  framework  of  appreciating  domestic  prod­ uct,  price  preference  may  be  granted.

(2)    Price preference shall be granted if TKDN of goods reaches or exceeds 25% (twenty five percent) of the promise/committment to the accomplishment of TKDN in the case of goods, or reaches or ex­ ceeds 30% (thirty percent) of the promise/com­ mittment in the case of service.

(3)    In the procurement of goods or procurement of engineering, procurement, construction and in­ stallation service substance of domestically pro­ duced goods may be granted TKDN-based price preference maximally 1 5 % (fifteen percent), counted proportionally on the basis of the accom­ plishment of TKDN adjusted to roadmap of the accomplishment of target of TKDN.

(4)   In the procurement of engineering, procurement, construction and installation  service  other  ser­ vice or consulting service, substance of domestic service shall be granted TKDN-based price prefer­ ence maximally 7. 5 % (seven point five percent), counted proportionally on the basis of  the  accom­

plishment  of TKDN odiUSted to  roadmap of the

accomplishment of target of TKDN.

Part Two

Corporate Status-based Price Preference Article 10

In the procurement of goods, domestic pro­ ducers having status of domestic company with the accomplishment of TKDN 25% (twenty five percent) or higher may be granted additional price preference maximally 2.5% (two point five percent), besides the TKDN-based price preference in accordance with the provision as meant in Article 9 paragraph (3).

CHAPTER IV LOCAL CONTENT

Part One TKDN of Goods

Article 11

(1)          TKDN of goods shall be counted on the basis  of the cost of domestic components in goods, com­ pared to  the  whole  cost  of product.

(2)          The whole cost of product as meant in paragraph   ( 1) shall be counted as far as the location of work (factory I workshop) and constitute cost spent for the  production  of  goods, covering:

1. direct component (material) cost;

1. direct manpower cost; and

1. factory overhead cost, excluding profit, com­ pany overhead cost and output tax in the framework of the delivery of goods.

13)       The   determination  of   the  domestic  component

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GOVERNMENT REGULATIONS

cost in the goods as meant in paragraph (1 ) shall be based  on criteria:

1. in the case of direct component (material), based on country of origin;
2. in the case of manpower, based on national­ ity; and
   1. in th ecase of working equipment/facility, based on ownership and country of origin.

(4) Procedure for the calculation of TKDN of goods shall follow the provision of legislation issued by the minister in charge of  industrial affairs.

Article 12

The calculation of TKDN of the  combination of several kinds of goods shall be based on the ra­  tio of the sum of the multiplication of TKDN of each goods with the acquisition price of each goods to the acqusition price of the combination of  goods.

Part Two TKDN of Service

Article 13

(1)       TKDN of service shall be calculated on the basis of the ratio of service cost of domestic  component in service to  the total cost of service.

(2)        The total cost of service as meant in paragraph (1) shall be counted as far as the location of work (on site) and constitute cost spent for the production of  service, covering:

1. cost of component  (material)  which is used;

1. manpower and consultant cost;

1. cost of working equipment/facility; and

1. general  service cost,

excluding profit, company overhead cost and output tax.

(3)        The determination of  cost of  domestic  component in the service as meant in paragraph ( 1 ) shall be based  on criteria:

1. in the case of material being used to help the provision of service, based on country of ori­ gin;
2. in   the   case   of    manpower    and   consultant,   1

based on nationality;

1. in the case of working equipment/facility, based on ownership and country  of  origin; and
2. in the case of general service cost, based on the criteria as meant in letter a, letter b, and letter  c.

(4)        The determination of domestic component of the working equipment/facility as meant in paragraph

(3) letter c shall be based on the following _provi­ sion:

1. working equipment produced in the country and owned by domestic company or Indone­ sian citizen is valued as much as 100% (one hundred percent) of domestic component;
2. working equipment produced in  the  country and owned by national company is valued as much  as  75  %  (seventy  five  percent)  of the

domestic component;

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1. working   equipment   produced  in   the  country    1      (  1)   TKDN  of   the   combination  of   goods   and service

and owned by foreign company or foreign citi­ zen is valued as much as 50% (fifty percent) of the domestic component;

1. working equipment produced abroad and owned by domestic ocmpany or Indonesian citizen is valued as much as 75 % (seventy five percent) of the domestic component;
2. working equipment produced abroad and owned by national company is valued as much as 50% (fifty percent) of the domestic component; or
   1. working equipment produced abroad and owned by foreign company or foreign citizen is valued as much as 0% (nil percent) of the domestic component.

Article 14

(1)         The calculation of TKDN of service shall be in­ quired as far as the second-level service which is produced by domestic  service  provider.

(2)         In the event that component resulting from the third-level service provided by domestic service provider is found in the inquiry into  the second­ level sevice as meant in paragraph (1), TKDN of component of the third-level service shall be de­ clared  100  (one hundred percent)

Part Three

TKDN of Combination of Goods and Service Article 15

shall constitute a ratio of the whole cost of do­ mestic components in the combinantion of goods and service to the whole combined cost of goods and service.

(2)   The whole combined cost of goods and service as meant in paragraph (1) shall constitute cost spent to produce the combination of goods and service, which is counted as far as location of work (on site).

(3)   TKDN of the combination of goods and service as meant in paragraph ( 1) shall be counted in every activity of the combination work of goods and service.

(4)   The spent cost as meant in paragraph (2) shall in­ cludec production cost in the calculation of TKDN of goods as meant in Article 11 paragraph (2) and service cost in the calculation of TKDN of service as meant in Article 13 paragraph (2).

Part Four

Data and Recapitulation of TKDN Article 16

(1)        TKDN shall be calculated on the basis of account­ able data.

(2)       In the case of data used in the calculation of TKDN as meant in paragraph (1) being not accountable, the value of TKDN  of  the  said  component  shall be nil.

(3)        Format  of  the recapitulation of  the calculation of

TKDN  of  goods,  service  as  well  as combination

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GOVERNMENT REGULATIONS

of goods and service shall be as contained in At­ tachment 11, Attachment Ill and Attachment IV, which constitute an integral part of this ministe­ rial regulation.

CHAPTER V VERIFICATION

Article 17

(1)  ) Contractors or suppliers of goods and/or providers of  service  shall  be  obliged  to  verify the  accom­ plishment of TKDN of the combination of serveral kinds of goods, several kinds of service or com­ bination of goods and service  with the provision as follows:

1. verification of the procurement of combi­ nation of several kinds of goods, combina­ tion of several kinds of service or combina­ tion of goods and service with the value Rp 50,000,000,000 (five billion rupiah) or more and the accomplished TKDN 30% (thirty per­ cent) or higher is obliged to use service of independent surveyor having qualification to verify;
2. verification of the procurement of combi­ nation of several kinds  of goods,  combina­ tion of several kinds of  service  or  combina­ tion of goods and service with the value Rp 5,000,000,000 (five billion rupiah) up to Rp 50,000,000,000 (fifty billion) and the accom­ plished TKDN 30% (thirty percent) or higher may  use  service  of  independent  surveyor or

may be executed by contractor personnel having qualification to verify.

1. in the case of the procurement of goods and/or service with the value less than Rp 5,000,000,000 (five billion rupiah) or kind of service having low complexity, the accom­ plishment of TKDN may be calculated person­ ally (self assessment) by personnel of supplier of goods andor provider of service having qualification to verify.

(2)   Result  of  the  verification  as  meant  in paragraph

(1) letter a and letter b shall be legalized by the Directorate General.

(3)   The Directorate General may audit report on the accomplishment of TKDN in the procurement of combination of several kinds of goods, several kinds of services or combination of goods and service in the usptream oil and natural gas busi­ ness activities.

Article 18

(1)         The qualified independent surveyor as meant in Article 17 paragraph (1) letter a shall constitute domestic  companies having SKUP Migas.

(2)        The implementation of verification shall be obliged to use personnel having qualification to verify.

(3)        Provision on guidance for verification and qualifi­ cation of verifier of TKDN  shall be stipulated  by the Director General.

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CHAPTER VI FOSTERING AND SUPERVISION

Article 19

(1)          The Director General! shall foster and supervise the implementation of the provision on the uase of domestic producers in the upstream oil and natural gas business activities.

(2)         In executing the fostering and supervision as meant in paragraph (1), the Director General may establish a team for the use of domestic  products in the usptream oil and natural gas business ac­ tivities.

(3)        The membership composition of the team for the use of domestic products in the upstream oil and natural gas business activities as meant in para­ graph (2) shall consist of representatives of the Directorate General, Special Executive Working Unit of Upstream Oil and Natural Gas Business Activities, Contractors, as well as related  institu­ tions  and associations

CHAPTER VII AWARD

Article 20

(1)         The minister shall grant award to contractors, domestic producers, and suppliers of goods and/  or providers of service to appreciate their perfor­ mance in the utilization of domestic producers in the usptream oil and natural gas business activi­ ties.

(2)         Kinds of thij owoni as meont ,n  paragraph \ )

shall be in  the  form of:

1. gold rating, in the case of contractors, do­ mestic producers, and suppliers of goods and/ or providers of service belonging to the very good category;
2. silver rating, in the case of contractors, do­ mestic producers, and suppliers of goods and/ or providers of service belonging to the good category;
3. bronze rating, in the case of contractors, do­ mestic producers, and suppliers of goods and/ or providers of service belonging to the rela­ tively good category;

(3)         Provision on procedure and requirement for the granting of the award shall be stipulated by the Director General.

CHAPTER VIII SANCTION

Article 21

(1)   The Head of the  Special  Executive  Working  Unit of Usptream Oil and Natural Gas Business Activi­ ties shall impose sanction on contractors violating the provision in Article 4 paragraph ( 1), paragraph (2), Article 7 letter a, letter b, letter c, letter d, or letter  e, Article  17  paragraph  (1)  letter  a or letter b or paragraph (2).

(2)   The Director General shall impose sanction  in the form of written warning and/or revocation of SKUP Migas on domestic producers violating the

provision   in   Article   4   paragraph   ( 1), paragraph

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GOVERNMENT REGULATIONS

(2), Article 8 paragraph (1) letter a, letter b, let­ ter c, or letter d, paragraph (2) letter a, letter b, or letter c.

(3)   The Director General  shall  impose  sanction  in  the form of written warning and/or revocation of SKUP Migas on suppliers of goods and/or provid­ ers of service violating the provision in Article 4 paragraph ( 1), paragraph  (2),  Article paragraph ( 1) letter a, letter b, letter c, or letter d, Article 17 paragraph (1) letter a or  letter  b atau  paragraph (2).

(4)   The administrative sanction in the form of written warning as meant in paragraph (1) and paragraph

(2) shall be granted maximally 2 (two) times in the period of  one month at the maximum.

(5)   In the event that domestic producers or suppliers of goods and/or providers of services receiving the warning do not fulfill their obligation after the expiration of the second written-warning period, the Director General shal impose admiinstrative sanction in the form of the revocation of SKUP Migas.

Article 23

( 1) Domestic producers and/or suppliers of goods and/or providers of service violating the provision in Article 8 paragraph (1) point b, Article 10 fol­ lowing the implementation of the procurement contract of goods and/or service shall be subject to  financial  sanction by contractors  with the pro­

1. in the case of the ranking of winner not chang­ ing, the sanction is as much as the difference between the evaluation price of bid  (HEP)  in the contract realization phase· and HEP in the bidding phase;
2. in the case of the ranking of winner changing, the sanction is as much as the difference be­ tween the evaluation price of bid (HEP) in the contract realization phase and HEP in the bid­ ding phase, plus the difference between value of contract of the first rank and bidding  value   of  the  second rank in the  bidding phase.

(2)   The financial sanction as meant in paragraph (1) shall be subtracted from the payment value of contract.

(3)    Example of the calculation of the sanction as meant in paragraph (2) shall be as contained in Attachment V, which constitutes  an integral part of this ministerial regulation.

CHAPTER IX CONCLUSION

Article 24

The ministerial regulation shall come into force as from the date of promulgation.

For public cognizance, the ministerial regulation shall  be promulgated by placing it in State Gazette of the Republic  of Indonesia.

Stipulated in Jakarta

vision as follows:

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On february 22,2013

GOVERNMENT  REGULATIONS

THE MINISTER OF ENERGY AND MINERAL RESOURCES OF THE REPUBLIC OF INDONESIA

sgd.

JEROWACIK

Promulgated in Jakarta On  February 22,2013

THE MINISTER  OF LAW AND HUMAN RIGHTS  OF THE REPUBLIC  OF  INDONESIA

sgd

AMIR SY AM SUDIN

ATTACHMENT I

TARGET  OF LOCAL  CONTENT  OF GOODS/SERVICE  IN UPSTREAM  OIL AND GAS BUSINESS ACTIVITIES

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GOVERNMENT REGULATIONS

THE MINISTER OF ENERGY AND MINERAL RESOURCES OF THE REPUBLIC OF  INDONESIA

sgd.

JERO WACIK

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GOVERNMENT  REGUl ATIONS

ATTACHMENT II

CALCULATION  OF LOCAL CONTENT-GOODS

Note:

1         •       %  TKDN  Goods   =  Total  cost  (IV.cl  -   Total  imported  component  cost (IV.bl

Total cost (IV.cl

• % TKDN Goods  =  Total domestic  component  cost (IV.a)

Total cost (IV.cl

• Statement of  TKDN achieving  >  15%   must be enclosed by SKUP  Migas.

THE MINISTER  OF ENERGY AND MINERAL RESOURCES  OF THE REPUBLIC OF INDONESIA

sgd JERO WACIK

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ATTACHMENT Ill

GOVERNMENT REGULATIONS

CALCULATION  OF LOCAL CONTENT  -  SERVICE

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GOVERNMENT REGULATIONS

Note:

• % TKDN Service  =  Total cost (A.V.d)  -   Total imported component  cost (A.V.c)

Total cost (A.V.d)

• % TKDN Service  =  Total domestic component cost (A.V.b)

Total cost (A.V.d)

THE MINISTER  OF ENERGY  AND MINERAL RESOURCES OF THE REPUBLIC OF INDONESIA

sgd JERO WACIK

ATTACHMENT IV

CALCULATION  OF LOCAL  CONTENT  -  GOODS  AND SERVICE

Business News 8470110-23-2013                                                                                                    39

       GOVERNMENT REGULATIONS

Note:

• %  TKDN Combination

Total domestic component cost of goods (A.1.3.b) +

Total domestic component cost of service (A.11.5.a) Total cost (A.111.d)

THE MINISTER OF ENERGY AND MINERAL RESOURCES OF THE REPUBLIC  OF INDONESIA

sgd JERO WACIK

40                                                                       Business   News 8470/10-23-1013

ATTACHMENT V

GOVER JMrnT REGULATIOrJS

EXAMPLE OF CALCULATION OF FINANCIAL SANCTION  AGAINST  THE FAILURE TO ACCOMPLISH  TARGET  OF   TKDN AND/OR  CORPORATE STATUS

1. Calculation of Fine Due to the Failure to Accomplish Commitment to TKDN a/or Status Perusahaan -  Not  Changing  Rating of Winner

Business News 8470/10-23-2013                                                                                                  41

GOVERNMENT REGULATIONS

Fine      HEP Realization of Contract  (A)  -  HEP of Bid (A)

Fine      Rp.26.972.083.455, 77 -  Rp.26.870.558.494,45                 Rp.101.524.961,32

1. Calculation of Fine Due to  the  Failure to  Accomplish the Commitment  to TKDN  -  Changing Winner  Rating

42                           Business News 8470110-23-2013

Fine       =

Fine       =

GOVERNMENT REGULATIONS

(HEP of Contract Realization - HEP of Bid) + (Contract Value - Bid Price of Rank 2nd I) (Rp.27.634.824.667,47  -   Rp.  26,867,469,880.00)  +

(Rp.27.800.000.000,00  - Rp.27.500.000.000,00