House members to give oil and gas bill hard look

House members to give oil and gas bill hard look

JAKARTA (JP): A leading legislator expressed optimism on
Thursday that the House of Representatives would be able to pass
the controversial oil and gas bill before the end of their terms
in August.

"In my opinion, the debates will run smoothly, given that
there is no big difference in opinions of House factions
regarding the bill," the head of the House's special team for the
deliberation of the bill, Erie Sukardja, said after a meeting
with Minister of Mines and Energy Kuntoro Mangkusubroto.

Erie said House factions had discussed the bill for more than
one month and would resume the debate from June 15 to July 29,
after a long recess for the general election.

Current legislators will end their terms on August 31 after a
long recess from August 2.

"In fact, we have enough time to debate the bill from June to
July, but if we can't pass it into law on July 29 as scheduled,
we can extend the debate through the recess period in August,"
Erie said, promising that legislators would seriously examine the
bill "from dawn to dusk".

Several analysts have called on the House to cancel the debate
of the bill to allow the new House members, to be elected during
the June 7 general election, to do the job.

Observers said that debating the bill in extremely tight
schedules will prompt legislators to overlook limitations in the
bill, which has drawn public controversy especially regarding the
proposed liberalization in the domestic fuel market.

Changes

In the meeting between the House special team and Kuntoro on
Thursday, all House factions proposed changes in main clauses of
the bill, including those regarding the right to award contracts,
contract types and liberalization of the downstream sector.

Under the bill, the government will take over state oil and
gas company Pertamina's rights to award oil and gas exploration
and exploitation contracts to companies, and their right to
manage and regulate oil and gas contractors.

All House factions said the government should focus on its
role as a regulator and appoint a state company to represent it
in dealing with contractors.

Currently, besides awarding contracts, Pertamina also operates
as a partner of the oil and gas operator.

Regarding types of contract, all factions want the government
to maintain the production sharing contract (PSC) system which is
currently obligatory, arguing that the PSC system is beneficial
to the country.

Under the PSC system -- introduced by Pertamina in the 1960s
and subsequently copied by many developing countries --
Pertamina, on behalf of the government, has the right to manage
oil and gas contractors and check the companies' cash flow.

The bill indicates that in the future oil and gas contractors
may have types of contracts other than the PSC system.

Golkar spokesman Oedyanto Hadisoedarmo said, "Golkar is
inclined to maintain the PSC system ... given that under the
system the government controls the management.

"This is in line with the constitution and is not in conflict
with a United Nations resolution which says natural resource
exploitation by foreign contractors should be supervised by the
host government."

The United Development Party (PPP) faction, through its
spokesman Aslam Asyhari, said, "The PSC system ... must be
maintained and must be explicitly stated in the oil and gas law".

Under the bill, the government will lift the decade-long
monopoly held by state oil and gas Pertamina on the downstream
sector, opening the sector to private companies.

The majority of factions had no reservations with
liberalization of the downstream sector, but they said to quell
public concern over a possible sharp increase in fuel prices, the
bill should explicitly state that the government will maintain
the fuel subsidy for a stipulated time. (jsk)