President signs regulation on oil body

President signs regulation on oil body

The Jakarta Post, Jakarta

President Megawati Soekarnoputri has signed a regulation on
the establishment of an Implementing Body, which will take over
from state-owned oil and gas company Pertamina as the country's
highest authority in the oil and gas sector.

The body, which is better known by the acronym Balak, will
perform jobs that had been held by Pertamina for decades. These
include awarding oil and gas concessions, signing contracts with
oil and gas contractors and supervising the operation of oil and
gas contractors, as well as regulating the industry.

The establishment of the body was stipulated by Law No.
22/2001 on the oil and gas industry, which took effect on Nov.
23, 2001.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro
said on Wednesday that even though the regulation establishing
the body had been signed by the President, there were still some
"administrative things" that needed to be completed before the
new agency officially began operations.

He did not elaborate on what these administrative tasks were,
Antara news agency reported.

The copy of the regulation was not immediately available on
Wednesday, but according to Law. No. 22/2001 the agency is to be
independent and accountable to the President.

The agency will be headed by a chairperson, who will be
appointed and dismissed by the President, following consultations
with the House of Representatives.

The chairperson will be assisted by a vice chairperson and
several deputies, all of them experts in the industry.

Analysts estimate that the Balak will have about 500
employees, similar to the number of employees at Pertamina's
directorate of production sharing contract management, which
supervises the country's oil and gas contractors.

In fact, the government has offered all of the employees at
the directorate the opportunity to move to the new body.
Reportedly, some of the employees have declined the offer,
fearful that the salaries at the body would not be comparable to
what they earn at Pertamina.

With the establishment of the Balak, Pertamina will now be
gradually transformed into a limited liability company -- a
status that will eventually allow the state company to sell its
stocks to the public.

Analysts are in agreement that the chairmanship of the Balak
is an extremely strategic position. These analysts have warned
that the position could become a bone of contention among
politicians, as it could provide numerous opportunities for the
illegal collection of financial resources.

Analysts have thus urged the government to entrust the
position only to a professional, in the hope that this will help
prevent the sort of corruption that has plagued the industry for
decades.

According to current rumors among those in the industry, the
current director general of oil and gas at Ministry of Energy and
Mineral Resources, Rachmat Sudibyo, will be the first Balak
chief.