Oil, gas law not against Constitution, court rules<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The Constitutional Court on Tuesday upheld a 2001 oil and gas
\nlaw that was designed to liberalize the sector and to gradually
\nreduce the role of state firm Pertamina, saying the law did not
\nviolate the 1945 Constitution and should therefore remain in
\nplace.<\/p>\n
However, minor revisions to the legislation -- notably some
\nwordings in articles 12, 22, and 28 -- would need attention to
\navoid misinterpretations, judge Jimly Asshiddiqie said.<\/p>\n
\"Based on our investigation, the petition by the plaintiffs is
\nrejected,\" he said when rendering the verdict.<\/p>\n
The decision was the second important ruling issued by the
\nnewly established Constitutional Court within the past week,
\nhaving last week annulled the Electricity Law No. 20\/2002.<\/p>\n
The electricity law was designed to push ahead the
\nliberalization of the sector, accelerating the reduction of the
\nmonopolistic authority of state power firm PT PLN.<\/p>\n
That decision raised concerns among industry players and
\ngovernment officials, who warned that revoking the law would only
\ncreate uncertainty and hurt efforts to attract investment into
\nthe troubled sector, where a steady drop in output has led to a
\nrise in fuel subsidy spending.<\/p>\n
Under the Oil and Gas Law No. 22\/2001, Pertamina's control
\nover upstream and downstream sectors are transferred to two
\nregulatory bodies, while new players would be allowed to compete
\nin the sector.<\/p>\n
Meanwhile, the Court said that the three problematic articles
\nin the law center on the rights to explore and exploit oil and
\ngas resources, the minimum quota for oil and gas that producers
\nhave to set aside for domestic supply, and the mechanism
\ndetermining pricing of oil.<\/p>\n
Judge Mukthie Fadjar told a press briefing afterwards that the
\nwording \"rendering the authority\" in article 12 could be
\ninterpreted as the government relinquishing control over the
\ncountry's petroleum resources.<\/p>\n
\"Perhaps, 'delegating the rights' would be better,\" he said,
\nadding the revision should reflect that the government was
\nactually allowing private firms to explore for oil and gas with
\nthe assets remaining under state control.<\/p>\n
The article 22 stipulates that oil and gas producers are
\nobliged to dedicate up to 25 percent of their production capacity
\nfor domestic supply.<\/p>\n
Mukthie said the article should also have mentioned the
\nminimum quota in addition to the maximum quota of 25 percent, so
\nas to help secure oil and gas supplies for the domestic market.<\/p>\n
The article on pricing, by which prices for fuels would be
\ndetermined solely by market mechanisms, was deemed as being
\nunfair to the poor. The government should instead make sure that
\nit controls the prices of commodities that are of high importance
\nto the people, added Mukthie.<\/p>\n
Elsewhere, the verdict was immediately met with fierce
\nprotests from hundreds of members of non-governmental
\norganizations (NGOs) and a labor union representing Pertamina's
\nworkers.<\/p>\n
Seen among the posters they held aloft was one reading
\n\"Congratulations, the government has allowed foreigners to rob
\nour resources at the expense of Indonesian people.\"<\/p>\n
The organizations had asked the court to nullify the oil and
\ngas law that they claim would cause job losses at Pertamina and
\nhigher fuel prices.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/oil-gas-law-not-against-constitution-court-rules-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}