Government warns of slow growth in oil sector

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)