House rejects oil and gas bill afters lengthy debate

JAKARTA (JP): The House of Representatives officially rejected on Thursday the government-sponsored oil and gas bill after both parties failed to reach a compromise after six months of debates.

It is the first bill to be rejected by the House, at least since former president Soeharto took power in the late 1960s.

With the rejection of the bill, the Law No. 8/1971 on state oil and gas company Pertamina, which gives substantial exclusive rights to the company over the country's oil and gas industry, remains effective.

The legislation has been blamed for massive corruption in the company throughout Soeharto's 32-year rule.

The military/police faction at the House -- the main supporter of the bill, which called for the removal of all monopolies held by Pertamina -- expressed disappointment over the House's rejection.

The faction's spokesman, AP Siregar, accused a "certain party" of colluding with various legislators to block the bill. He said they had acted in their own interests at the expense of the public, who had long dreamed of reforms in the country's oil and gas sector.

"It is this group of people who played the game ... surrounded the special committee for the deliberation of the bill with an unpleasant aroma and gave birth to the motto 'Let's fight for those who pay'," Siregar said in his speech in a plenary session.

There are rumors that Pertamina bribed legislators to block the bill in order to maintain its decade-long monopoly.

Pertamina has denied the rumor and claims that Kuntoro tried to bribe certain legislators.

Siregar called on the government to resubmit the bill to the House after the new legislators elected in the June polls were sworn in.

The sitting legislators will end their terms today (Friday), and the new legislators will be installed early next month.

The largest Golkar faction strongly denied allegations that some legislators had been bribed to block approval of the bill.

"The bribery rumor is a nasty slander systematically and consistently aimed at certain special committee members," Golkar faction spokesman Evita Asmalda said in her speech.

Golkar and two other factions -- the United Development Party (PPP) faction, which is the second-largest, and the Indonesian Democratic Party faction (PDI) -- said they returned the bill to the government because they disagreed with the liberal principles outlined in the bill.

The three factions said that instead of liberalizing the country's oil and gas industry, and forcing Pertamina to compete with multinational companies, the bill should enable the company to grow.

They said Pertamina was not yet ready for competition and that it must be allowed to maintain its current privileges, including the right to award oil and gas contracts and to supervise foreign oil and gas contractors.

"We need to develop Pertamina to become a strong, efficient and competitive state oil and gas company in the future. We are currently being driven into an open and very liberal global economy.

"But we have to realize the liberal global economy promoted by the developed countries does not always fit and bring benefits to a developing country like ours," said Anthony Rahail of the PDI faction.

The PPP faction supported moves for Pertamina to maintain its monopoly on the downstream sector.

"Pertamina's monopoly is a natural monopoly, which is theoretically and empirically more efficient and better for the public's welfare," said Aslam Asyhari of the PPP faction.

However, the TNI faction said Pertamina had become an inefficient monopoly. The faction cited a recent report by auditor PriceWaterhouseCoopers, which estimated company losses caused by irregularities during the 1997/1998 and 1998/1999 fiscal years at US$6.1 billion. (jsk)