Regencies warned against blocking oil, gas fields<\/p>\n
Moch. N. Kurniawan, The Jakarta Post, Jakarta<\/p>\n
Minister of Finance Boediono warned oil and gas producing regions
\nunsatisfied with the existing revenue split with the central
\ngovernment against launching a blockade on oil and gas operations
\nin their areas as such a move could be disastrous for their
\neconomies.<\/p>\n
\"The blockade move would only scare investors away. We must
\nrealize that it's the people of the regions who will suffer
\nmost,\" he told reporters Tuesday.<\/p>\n
\"This is not the time to make threats... If there's any
\ndisagreement ... let's sit together to resolve the problem,\" he
\nadded.<\/p>\n
He said that he would meet with the protesting regions to
\ndiscuss the problem and try to prevent the blockade from
\nhappening.<\/p>\n
Boediono was responding to the threat made by the association
\nof oil and gas producing regencies (FKDPM) to blockade oil and
\ngas operations in their respective areas unless the government
\nrevoked finance ministry decree No. 214\/KMK.06\/2002 on this
\nyear's oil and gas revenue split between the central government
\nand regional administrations.<\/p>\n
FKDPM senior official Dradjat Hadiwijoyo was quoted by the
\nKompas daily as saying that the deadline for the government to
\ndrop the decree was June 1, 2002.<\/p>\n
The association said that oil and gas producing regions were
\nnot satisfied with the revenue split formula set under the
\nfinance ministry decree.<\/p>\n
According to the Intergovernmental Fiscal Balance Law No.
\n25\/1999, oil producing regions are entitled to 15 percent of
\nrevenue from the commodity (the central government gets 85
\npercent), and 30 percent from gas (the central government gets 70
\npercent).<\/p>\n
Of the 15 percent oil revenue split, the oil producing regency
\nadministration will get 6 percent, while the remainder to be
\ndistributed between the provincial administration and other
\nregencies in the province.<\/p>\n
But FKDPM claimed that according to their calculations, based
\non the finance ministry decree, the producing regions will only
\nget between 1 percent and 2 percent in oil revenue this year.<\/p>\n
The oil and gas revenue split is part of the autonomy policy
\nlaunched by the government in 1999.<\/p>\n
For eyebox<\/p>\n
Point of dispute<\/p>\n
Under the standard production sharing contracts, the
\ngovernment takes 85 percent of contractors' oil output and 70
\npercent of their gas output, giving the remaining to contractors.
\nThe government's 85 percent oil take includes 73.21 percent in
\nthe government's oil share and 11.79 percent in corporate tax
\npayable by contractors, while the government's 70 percent gas
\nshare includes 46.42 percent in the government's gas share and
\n23.58 percent in corporate tax payable by contractors.<\/p>\n
Under the Intergovernmental Fiscal Balance Law No. 25\/1999,
\nthe central government delivers 15 percent of its oil share or
\nits after-tax oil earnings and 30 percent of its gas share or its
\nafter tax gas earnings to the regional governments.<\/p>\n
The 15 percent government oil share will then be distributed
\nto producing regencies (6 percent), non-producing regencies (6
\npercent) and the province (3 percent). The 30 percent government
\ngas share will be distributed to producing regencies (12
\npercent), non-producing regencies (12 percent) and the province
\n(6 percent).<\/p>\n
Calculations by the association of oil and gas producing
\nregencies (FKDPM) made available to The Jakarta Post Tuesday
\nindicated that a producing regency got 6 percent of the
\ngovernment's oil share or after-tax oil earnings. But, the
\nearning accounts for only 2.74 percent of the government's oil
\ntake or before tax oil earnings. The association is demanding a
\nproducing regency be given 6 percent of the government's oil take
\non before-tax oil earnings.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/regencies-warned-against-blocking-oil-gas-fields-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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