Regencies demand role in calculating oil, gas revenue

Regencies demand role in calculating oil, gas revenue

Moch. N. Kurniawan, The Jakarta Post, Jakarta

The country's oil- and gas-producing regions demanded the central government include them in calculating revenue split from the two commodities or let an independent consultant do the job to ensure fairness and transparency.

"We want to be involved in a team to calculate the split, or let's appoint a credible independent consultant to do it," Irianto M.S. Syaifuddin, chairman of the association of oil and gas producing regencies (FKDPM), told The Jakarta Post on Wednesday. He is also the regent of Indramayu, West Java.

"Our demand is clear; we want the central government to be transparent," he added.

FKDPM said earlier that oil- and gas-producing regions would blockade oil and gas operations in their areas unless the government revoked the finance ministry decree that stipulates this year's revenue split from the two commodities between the regions and the central government.

The association has set June 1, 2002, as the deadline.

But Minister of Finance Boediono warned the regions on Tuesday against carrying out a blockade as such a move would be disastrous for their economies. He said that the blockade would scare investors away.

Boediono urged the protesting regions to come to the negotiation table.

The regions have said that the revenue split formula set in the finance minister's decree gives them very little revenue from oil and gas, and that the split was not equal to what is stipulated under the Intergovernmental Fiscal Balance Law No. 25/1999.

Under the law, oil-producing regions are entitled to 15 percent of revenue from the commodity (the central government takes 85 percent) and 30 percent from gas.

Of the 15 percent oil revenue split, the oil-producing regency administration will receive 6 percent, while the remainder is distributed between the provincial administration and other regencies in the province.

But FKDPM said that according its calculations based on the finance ministry decree, the producing regencies would get only 1 percent to 2 percent in oil revenue this year.

The split between the central government and the oil- and gas- producing regions was set out as part of the government's autonomy policy launched in 1999 to help appease demands from resource-rich provinces for secession from the country.

But poor implementation of the autonomy policy has scared investors away, including oil and gas companies, as local governments have often implemented unfriendly policies that are not in conformity with contracts signed with the central government in the past.