House rejects oil and gas bill afters lengthy debate

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)