House threatens to delay COW deliberations

JAKARTA (JP): House of Representatives' Commission VI for industry, mining, manpower and investment has threatened to delay deliberations on the seventh generation draft contracts of work (COWs) until the government has resolved the issue of the commission taking bribes from COW applicants.

The commission's chairman, Erie Soekardja, said "we want to work in a conducive atmosphere. We are considering delaying the deliberations on the 164 seventh generation COWs until the issue is cleared".

Erie was commenting on newspaper reports that COW applicants had been asked to pay about Rp 25 million (US$9,915) per application to finance the commission's week-long inspection tour across the country earlier this month.

The tour involved commission members going to provinces where the concessions applied for are located and was part of the commission's deliberation process to decide which draft COWs to grant.

Press reports quoted industry sources as saying the money was given to the commission through the Directorate of General Mining.

Ministry of Mines and Energy spokesman Bangun Usman Harahap confirmed the directorate had asked for Rp 24.7 million (US$9,150) per application from mining companies that had applied for COWs.

He said the payments were legal and treated as donations to cover the costs of photocopying bulky COW documents.

"The money was not used and will not be used for any other purpose; only for photocopying the COW documents," Bangun said, rejecting allegations that commission members had received part of the donations.

Erie said the press reports were sensationalist and slanderous.

But the Golkar legislator said the commission had accepted money from the government to pay for its inspection tour.

"Because the tour was made during the recess period, the provincial visit could not be funded from the House budget. So, the commission got the money directly from the Ministry of Mines and Energy," Erie said.

"We don't make an issue out of where the government got the money it gave us," Erie was quoted by Antara as saying.

But, according to House working procedures, House members usually make provincial working visits during the recess period.

Erie said there had been no contact between the commission and investors over the COWs, but only with the Ministry of Mines and Energy.

The Indonesian Mining Association's vice president, M. Simatupang, said Saturday that Erie was telling the truth.

"Investors only make contact with the government," he said.

Simatupang said this was not the first time the government had asked for money from contractors applying for COWs.

In the past, COW applicants had also been asked to donate money to cover part of the cost of processing documents, Simatupang said.

"Investors see such a payment as part of the cost of processing the applications and they don't consider such an obligation particularly burdensome," he said.

Mining analysts said the commission's threat to delay COW deliberations was worrying contractors who fear they will have to wait much longer to have their contracts approved.

Contractors are afraid that if the House does not complete its examination of the draft COWs before the House's tenure ends in September, the examination will be taken over by the new House.

That would mean the whole process would start over again from the beginning.

Contractors are also afraid the new House may demand changes to the draft COWs to give the state or state-owned companies a stake in all new mining ventures.

The issue of the government having an equity stake in mining ventures has become a hotly debated topic after the Busang gold mine controversy early this year when a purported huge gold discovery in Kalimantan turned out to be a hoax.

Simatupang said investors still hoped the government would keep its promise to approve the contracts as soon as possible.

"The government has promised that the House's examination of the draft COWs will be completed by September," he said.

House deliberation is the last stage before a draft COW is sent to the President for final approval. (jsk)