JP\/18\/bill<\/p>\n
New oil and gas bill set for legislation<\/p>\n
Moch. N. Kurniawan
\nThe Jakarta Post
\nJakarta<\/p>\n
If an oil and gas bill is passed into law on Tuesday, it will
\nend the 30-year monopoly of state oil and gas company Pertamina
\nover the country's oil and gas industry.<\/p>\n
The House of Representatives is scheduled to hold a plenary
\nsession to pass the government-proposed oil and gas bill after
\nseveral months of debate.<\/p>\n
\"It's now time to pass the bill into law. Frankly speaking,
\nthis law will become a masterpiece among the country's laws,\"
\nlegislator Emir Muis of the Indonesian Democratic Party for
\nStruggle (PDI Perjuangan) faction, who is a member of the House's
\nspecial team to debate the oil and gas bill, told the Jakarta
\nPost on Saturday.<\/p>\n
He said that the House had done its best to accommodate all
\nthe parties' aspirations during the bill's debate.<\/p>\n
\"What have we not included in the draft law?\" he asked.<\/p>\n
Emir said the House was determined to pass the bill on Tuesday
\ndespite criticism from various parties, including the
\nConsultative Forum of Oil Producing Regencies and some executives
\nof foreign oil and gas companies.<\/p>\n
The regency forum has taken great pains to block the bill.<\/p>\n
\"We have sent letters to the speakers of the People
\nConsultative Assembly and the House, and the President to delay
\npassing the bill. We hope they heard us,\" Irfan N. Djafar, the
\nEast Lampung regent, who is also the regency forum's secretary,
\ntold the Post.<\/p>\n
\"Should the bill be passed into law, we will consider holding
\na mass demonstration in the oil and gas fields,\" he added.<\/p>\n
The forum has repeatedly protested the bill for not giving
\nregents a role in formulating the national oil and gas policy and
\nin supervising the implementation of the policy.<\/p>\n
A.R. Natanegara, the vice president of major American oil
\ncompany Conoco Indonesia, blasted the bill, saying that foreign
\ninvestors had identified at least five articles in the bill which
\nwould cause problems for foreign investors, including those that
\nconcern tax, the establishment of an executive body, the
\nobligation of investors to supply gas to the domestic market, the
\nstatus of existing contracts and the licensing of operations.<\/p>\n
The new bill is aimed at liberalizing the country's oil and
\ngas sector, removing state oil and gas firm Pertamina's decades-
\nlong monopoly on the sector and turning the state company into a
\nlimited liability company.<\/p>\n
If the bill is passed into law, it will replace Law No.
\n44\/1960 on oil and gas and Law No. 8\/1971 on Pertamina.<\/p>\n
If it is passed into law, the government will set up an
\nexecutive body and regulate bodies which will end Pertamina's
\nmonopoly.<\/p>\n
The executive body will take over Pertamina's role in signing
\ncontracts with contractors, while the regulating body will manage
\nthe domestic fuel supply and distribution.<\/p>\n
Emir said that it would give a two-year transition period for
\nPertamina to turn into a limited liability company.<\/p>\n
He said if the bill was passed it would maintain the
\nproduction-sharing contract scheme, but it would also give room
\nfor other contract schemes with investors as long as it benefits
\nthe country.<\/p>\n
The bill also stipulates that contractors will be allowed to
\nchoose either to pay taxes in accordance with the tax regulation
\napplicable at the time their contracts are signed, or in
\naccordance with existing regulations, he said.<\/p>\n
Investors will also be obliged to undertake community
\ndevelopment, an obligation which is nonexisting in previous laws,
\nEmir said.<\/p>\n
Emir said that the bill also obliged contractors to supply gas
\nto the domestic market to guarantee a sustainable availability of
\nthe fuel locally.<\/p>\n
\"We must realize that gas will be widely used in the future.
\nWe don't want companies to just export it, they must also meet
\nthe local demand,\" he said. \"If investors don't like that, they
\ncan leave the country.\"<\/p>\n
For box:<\/p>\n
Key points in the oil and gas bill:
\n* The establishment of an executive body to replace Pertamina's
\nrole in dealing with investors.
\n* The establishment of a regulating body to manage domestic fuel
\nsupply and distribution.
\n* Pertamina will be given two years to become a limited liability
\ncompany.
\n* Contracts with investors are based on a production-sharing
\ncontract scheme or other contract schemes as long as they benefit
\nthe country.
\n* Investors are allowed to choose a tax ruling based either on
\nthe regulation applicable at the time their contracts are signed
\nor on existing regulations.
\n* Investors are obligated to undertake community development and
\nto supply gas for domestic use.<\/p>",
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