Oil, gas bill's revenue sharing plan criticized

JAKARTA (JP): Several academics criticized the oil and gas bill currently being debated by the House of Representatives for its unclear revenue sharing formula between the central government and provincial administrations.

"The bill does not stipulate a clear-cut revenue sharing mechanism from oil and gas operations to provincial administrations," Daud Silalahi, a law professor at Bandung's University of Padjadjaran, said in statement issued at the conclusion of a one-day seminar held on Friday in the West Java capital of Bandung.

The seminar on the oil and gas bill, organized by the University of Padjadjaran, featured a number of noted speakers, including law professor Bagir Manan, Djuhaendah Hasan, professor of culture Kusnaka Adimihardja, economist Ahmadi Rilam and oil technology expert Arsegianto.

The proposed bill states "the government's share and earnings... are shared by the central and provincial governments whose sharing formula is determined in accordance with the existing law".

Daud also criticized the bill for lacking clear protections for national oil and gas companies amid the domination of foreign firms, and for failing to promote the role of small and medium- size businesses and cooperatives in the country's oil and gas industry.

"The oil and gas bill is still colored with a centralistic frame of mind. (It) does not contain... democratic views which put more emphasis on the public's participation (in the oil and gas sector) in accordance with the sociocultural life of the community."

The issue of revenue sharing has gained prominence following protests in several provinces over the allegedly unfair distribution of revenue between the central government and the provinces.

People in the natural resources-rich provinces of Aceh, Riau and Irian Jaya have demanded a greater portion of revenue from their natural resources. Some people in these provinces are calling for independence from Indonesia unless their demands are met.

The gas operation of United States-based Mobil Oil Corp. in Aceh and the oil operation of PT Caltex Pacific Indonesia in Riau have been the targets of demonstrations over the past several months. Local people are dissatisfied with the companies, which they claim do nothing to improve the welfare of the local community.

Under the current revenue sharing system, all oil revenue goes to the central government. From the central government the revenue then is distributed to the provinces through the state budget, regardless of the oil contribution of each province.

The House also is debating a government-sponsored bill on fiscal balance between the central government and local administrations.

This bill also has sparked criticism for having no clear-cut revenue sharing formula between the central government and provincial administrations.

Defending the bill, finance minister Bambang Subianto said the government would use a separate regulation to determine local administrations' share of income from natural resources in their area.

Analysts say the unclear revenue sharing formulas in the two bills demonstrate the government's lack of commitment in empowering provincial economies.

They say such a lack of commitment is opposed to moves by the government to increase the autonomy of provinces.

According to rumors, a major aid donor has pressured the central government to retain the majority of revenue from natural resources, particularly oil and gas, to ensure the government will be able to repay its debt. (jsk)