Government warns of slow growth in oil sector

JAKARTA (JP): Minister of Mines and Energy Kuntoro Mangkusubroto warned on Friday of likely slow growth in the country's oil and gas sector following the government's failure to enact a progressive bill governing oil interests.

"Investment will not increase significantly in the long term," he said at his office in commenting on the decision of the House of Representatives to drop the government-sponsored bill.

The House's special team deliberating the bill told Kuntoro on Thursday evening that it would recommend scrapping the bill altogether because of unbridgeable differences.

If a plenary meeting of the House endorses the recommendation at a plenary meeting on Monday, this will be the first time in 34 years that the House has rejected a bill proposed by the government.

Kuntoro said the bill would have dismantled the monopoly privileges of state oil and gas company Pertamina and therefore encouraged the growth of privately run upstream and downstream industries in the sector.

The bill also would have paved the way for the investigation of corruption, collusion and nepotism rampant in the oil and gas sector, he said.

He identified the giant Balongan refinery in West Java, purified terephtalic acid plant in Plaju, South Sumatra, and Kasim Sorong refinery in Irian Jaya among major projects that should be investigated because of allegations of irregularities.

Kuntoro appeared to be waging a lone battle during the four months of deliberation of the bill.

He lobbied hard behind the scenes to convince legislators to do away with the monopoly and other exclusive rights. But even President B.J. Habibie gave his support to Pertamina to retain the right to award lucrative contracts. (02)