Kuntoro upbeat petroleum law approved by July 29

JAKARTA (JP): Mines and Energy Minister Kuntoro Mangkusubroto and a chief legislator said on Tuesday they were optimistic the House of Representatives would approve a controversial oil and gas bill by July 29.

Kuntoro acknowledged that disagreements remained between the House and the government on several issues, but said most of the factions in the House supported the bill's objective of reforming the country's oil and gas industry.

"The most important thing is that most of the factions in the House agree with the government that we have to totally reform the oil and gas industry," Kuntoro said on the sidelines of a meeting to deliberate the bill.

The House resumed deliberations on the bill on Tuesday after several weeks of recess for political campaigns and the general election.

The head of the House's special team for the deliberation of the bill, Erie Soekardja of the ruling Golkar Party, also expressed optimism that the House would keep to schedule and approve the bill on July 29.

"All factions are close to each other in their views on the bill," Erie said, noting, however, that the team was ready to extend the timeframe for deliberating the bill to early August in case of a deadlock.

Some observers have called on the House to delay the deliberation of the bill until new legislators elected in the recent elections are installed.

They said the current legislators, who will end their terms in August, could not carefully examine the bill due to time constraints.

The bill seeks, among other things, to lift state oil and gas company Pertamina's decades-old monopoly on the country's downstream sector and open it up to foreign investment.

Under the bill, the government would also take over Pertamina's rights to award contracts and regulate and manage the country's oil and gas industry.

The bill also says oil and gas contractors would be able to choose contracts other than the production sharing contract (PSC) system.

All factions agree that the downstream sector should be liberalized, but some legislators have demanded that the law contain clauses that will secure the supplies of fuel to the public at affordable prices.

Soekardja said the Golkar faction rejected the government's plan to take over Pertamina's rights to award contracts and regulate contractors.

He said Golkar believed the responsibility should remain with a state company -- either Pertamina or another company to be formed by the government -- rather than the government.

"The government should not sign any contracts because it's too risky. Instead, the contracts should be made between two companies," Erie said.

Kuntoro said the government would not soften its stance regarding its intentions to end Pertamina's monopoly and take over the company's rights to award contracts and regulate and manage the country's oil and gas industry.

"There are no compromise as far these two things are concerned. Pertamina should return the government's rights to the government," Kuntoro said. (jsk)