Govt proposal on royalties' split gets widespread supports

JAKARTA (JP): Minister of Mines and Energy Kuntoro Mangkusubroto's proposal to split the government's royalties from mining, oil and gas operations with the producing provinces has received widespread support from legislators.

F.X. Soejitno of the Armed Forces faction and Djusril Djusan of the Golkar ruling party agreed yesterday with Kuntoro that the country should have a law to allow provinces to get part of the royalties from the development of their natural resources.

But, they said, such a law should also leave the central government sufficient royalties to finance the development of provinces with fewer natural resources.

"Indonesia is a unitary state, not a federal state. Provinces which lack natural resources, like West Sumatra and Nusa Tenggara, should also be given chances to develop along with those rich in natural resources," Djusril said.

Soejitno said such a law should appease the growing protests from people in several provinces who are demanding a part of the earnings from oil, gas and mining operations in their regions.

"I think protesters in such remote provinces like Aceh and Irian Jaya are not actually demanding political separation. They are only demanding that the central government give them a fair share of the earnings from their areas," Soejitno said.

Soejitno said House Commission VIII for the state budget and science and technology was preparing a bill on the balancing of central and provincial finance which would, among other things, regulate the sharing of royalties from mining, gas and oil operations between the central and provincial administrations.

Protests have been raised for years by people in several provinces about the fact that they do not receive part of earnings from the development of natural resources.

The protests have intensified since the downfall of Soeharto, who paid little attention to the complaints.

Some government critics are now warning about possible national disintegration if the central government does not heed the provinces' demands.

Under current production sharing contracts (PSC) with oil and gas contractors, the government receives between 75 percent and 90 percent of their output.

Under current contracts of work (COW) with mining contractors, the government receives taxes and royalties.

The earnings from oil and gas operations, as well as tax and royalties from mining companies are at present pooled into the state budget and then distributed to the provinces with little regard to their contribution to the state budget.

Furthermore, provincial administrations only receive half of the land and building tax with all other taxes going wholly to the central government.

Kuntoro said his ministry had made a regulation which obliged the holders of mining contracts signed since 1995 to send 80 percent of the royalties to local authorities and only 20 percent to the central government.

But the regulation has not been implemented because it is in conflict with another governmental regulation requiring that the royalties be delivered to the central government before being redistributed to the provincial administrations.

Soejitno said the 80 percent-20 percent split was fair enough and could be applied to other sectors like oil and gas. (jsk)