FKDPM demands role in deciding oil, gas revenue split

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.