New energy law will 'reduce foreign control'
New energy law will 'reduce foreign control'
Fitri Wulandari, The Jakarta Post, Jakarta
In a bid to "reduce foreign control" of energy resources, the
House of Representatives is currently drafting a new law on
energy that would require the government to obtain House approval
before awarding contracts to foreign companies.
Soetrisno, a senior legislator at House Commission VIII on
energy and mining, said on Monday that the new law would also
allow the House to annul contracts given to companies with a bad
reputation for environmental management.
"Energy is a strategic commodity," declared Soetrisno, who
heads the commission's special team drafting the new law.
The House is determined to complete the law before its current
term ends in October.
The new law would consolidate and synchronize all the existing
energy laws including oil and gas law (passed by the House in
2001), the electricity law (approved in 2002), and the geothermal
law (2003).
Soetrisno said that the new law was aimed at reducing the
control that foreigners had over the country's energy resources.
He explained that under the planned new law, the government
would have to obtain approval from the House before signing
contracts with foreign companies in oil and gas projects, power
infrastructure development and renewable energy projects.
Transactions with foreign countries, for example, on the sale
of liquefied natural gas (LNG) would also require House approval.
"The projects should comply with Indonesian law and benefit
the country," Soetrisno explained.
He added that the new bill was also being drafted amid
concerns over rapidly depleting energy resources in the country.
Current oil reserves of 5 billion barrels will be exhausted in
10 years, according to most estimates, while natural gas reserves
of 90 trillion cubic feet are projected to run out in 30 years.
Coal reserves which currently stand at 100 million tons would run
out in 50 years.
Activists and experts, however, criticized the bill for its
poor and oversimplified wording, a reflection of its hasty
drafting. It does not focus on the sustainability or the
affordability of energy for the public, they said.
Soetrisno, however, claimed that the new bill would not dampen
investor interest in the country's energy sector, as it would
give investors better legal certainty. He did not elaborate.
The government is trying to woo investors back into the
country's energy sector after being in the doldrums for the past
couple of years.
For instance, the government is offering better oil and gas
splits to lure back foreign investors. Indonesia needs new oil
exploration, which local companies are unable to do, to
compensate for high crude oil production and to prevent it from
being a net oil importer in the near future.