FKDPM demands role in deciding oil, gas revenue split

Evi Mariani, The Jakarta Post, Jakarta

Oil and gas producing regions demanded that they be included in the calculating of revenues from oil and gas production, in a move to pressure the central government to be transparent and honest in deciding the revenue split, amid suspicions of deceptive accounting procedures.

The demand was part of a list of recommendations made at the end of a two-day meeting of the Forum of Oil and Gas Producing Regions (FKDPM) on Thursday in Jakarta. The forum groups some 71 mayoralty and regency administrations.

According to Law No. 25/1999 on fiscal decentralization, producing regions get 15 percent of oil revenues from their areas, while the remaining 85 percent goes to the central government. The regions get 30 percent of the revenue portion from gas.

"We are not objecting to the split formula, but we only want the (central) government to be transparent in deciding how much money we'll get," FKDPM chairman Irianto Syafiuddin said.

The grouping did not spell out what measures should be taken to ensure transparency, but an official said that one possible option was to allow representatives of FKDPM to be included in BP Migas, the country's highest upstream oil and gas authority, to ensure that production data issued by the office was correct.

FKDPM will submit the list of recommendations to related ministries, government institutions and the House of Representatives.

Since the implementation of the regional autonomy in 1999, oil and gas producing regions have been aggressive in securing their rights over revenue from local natural resources.

They have demanded honest accounting practices in calculating the revenue split amid suspicion that the regions had been cheated by the central government.

The Ministry of Finance, which calculates the revenue based on data coming from BP Migas -- after approval by the Ministry of Energy and Mineral Resources, has largely disregarded the demand.

While BP Migas and the Ministry of Energy and Mineral Resources sent their officials to the FKDPM meeting, no one from the Ministry of Finance participated.

"They (the ministry officials invited to the meeting) said they had other appointments," said FKDPM executive director Yan Suhardja.

Oil and gas expert Made Astana said that it was important for the central government to heed the demand of the regions to help strengthen relations between Jakarta and the regions, which for many decades had been largely neglected by the central government of their rights to revenue from local natural resources.

"I think transparency is also crucial in establishing good governance," He added.

Aside from discussing the revenue split, the meeting also discussed the need for oil and gas companies to be more active in community development programs to help improve the welfare of the poor in the region.