House expects to oil and gas bill to be passed next month
JAKARTA (JP): Several legislators expressed optimism on Tuesday that the House of Representatives would pass into law the oil and gas bill proposed by the government as the House and government teams had reached agreement on most of the crucial issues.
Husni Thamrin of the second-largest Golkar faction and Julius Bobo of the largest PDI Perjuangan faction told The Jakarta Post that debates between the House and government teams on the bill were in progress, but the issues being debated were "unsubstantial".
"Now, the debates revolve around issues regarding the establishment of the Executive Body and the transitional period for (state-owned oil and gas firm) Pertamina to turn itself into a limited liability company," Husni said.
Under the bill, the government would establish an independent body called the Executive Body to supervise the country's oil and gas industry -- a role which has been held by Pertamina for the past three decades.
The bill aims to liberalize the country's oil and gas sector, lift Pertamina's decades-long monopoly on the sector and turn the state company into a profit-making limited liability company.
The new law will replace Law No. 44/1960 on the oil and gas industry and Law No. 8/1971 on Pertamina.
Under the Pertamina law, the state company signs oil and gas contracts, regulates and supervises the sector on behalf of the government.
Regarding the Executive Body, which will become the country's most powerful body in the oil and gas sector, Husni said major factions in the House preferred that the body be placed under the President rather than under the Minister of Energy and Mineral Resources.
The factions also demanded that the appointment of the body's members by the government were subject to the House's approval, he added.
Regarding Pertamina's transitional period, Husni said the House's major factions and the government still had differences over the length of period.
According to him, Golkar wants a one year transitional period for Pertamina, The Indonesian Democratic Party for Struggle (PDI- P) faction has proposed less than a year, while the government has proposed two years.
"Despite the remaining disagreement, I hope we can pass the bill into law in October," he said.
One of the crucial issues in the bill, which is being watched attentively by oil and gas contractors, concerns the type of oil and gas contract.
The government has for decades signed a production-sharing contract (PSC) as well as other types of contracts, which are based on the PSC system, including technical assistance contracts (TAC) and joint operating bodies (JOB) mandatory for all oil and gas contractors.
Under the PSC system, contractors have to deliver 85 percent of their oil output and 70 percent of their gas output to the government.
The bill proposed by the government gives the option for the contractors to choose contracts other than PSC contracts.
According to Husni, the House and the government's team agreed during debates in July that contractors should be given the option of choosing contracts other than the PSC system as long as the contracts could provide more revenue for the state.
But, Husni said, under the agreement, the government must ask the House's approval for any plan to introduce contracts different from the PSC system.
Julius Bobo from the PDI faction was also upbeat that the bill would be passed into law next month, but added that some points of the agreement were not yet final.
"Next month is our target to pass the bill as we have already been discussing the bill for long enough," he said.
The government submitted the bill in February this year.
He said the issues being debated by the House and the government included questions of whether to give the Executive Body the rights to sign the oil and gas contracts as well as supervision of the contract's implementation, or whether to limit its authority in watching the contractors, while the right of signing oil and gas contracts be given to other independent bodies. (iwa)