Regencies demand role in oil executive body

JAKARTA (JP): Leaders of several oil rich regencies demanded on Thursday that their representatives be included in the highest oil and gas body that will be formed by the government under the new oil and gas law.

Indramayu regent Irianto MS Syafiuddin and East Lampung regent Irfan Djafar said the inclusion of representatives of oil-rich regencies was necessary to secure the regencies' interests.

"We have the oil reserves. We want to be involved in determining what is good and bad for our people," Irianto told reporters on the sidelines of a meeting of the administrations of oil-rich regencies and municipalities.

Under the oil and gas bill, an independent body called the Executive Body will be formed to take over the supervision of the country's oil and gas industry, a function that has been exercised by Pertamina for the past three decades.

The bill, which is being deliberated by the House of Representatives and is expected to be passed into law next month, aims to liberalize the country's oil and gas sector, remove Pertamina's decades-long monopoly on the sector and turn the state company into a profit-making limited liability company.

The new law will replace Law No. 44/1960 on the oil and gas industry and Law No. 8/1971 on Pertamina.

Irfan insisted that oil and gas producing regencies were fully entitled to seek representation on the Executive Body.

"I think we have every right to be there," he said.

The oil-rich regencies planned to send a team to the House to discuss the matter with legislators, he said.

Irianto said his Indramayu regency had about 143 oil wells, and was also home to the giant Balongan refinery, which supplied fuel to Jakarta and the northern part of West Java. The refinery had a processing capacity of 125,000 barrels of crude oil per day.

Meanwhile, Irfan said his East Lampung regency was home to several oil fields, including the Widuri and Shinta offshore fields, in the South East Sumatra block operated by Spanish- Argentinean firm Repsol-YPF.

The regents also demanded that the central government be more transparent about the oil and gas revenues shared between the regencies and the central government.

So far, Irianto said, the regencies had yet to be properly informed by the central government about the oil and gas revenue- sharing formula, which created the suspicion that they weren't receiving as big a share as they deserved.

He said, for example, that his regency would only receive about Rp 12.9 billion (US$1.4 million) in oil and gas revenues this year, as against the regency's own projection of Rp 21 billion.

He warned that any reduction in the regencies' revenue share by the central government would amount to a violation of Law No 25/1999 on fiscal balance between the center and the regions, which stipulated that the regional governments should receive 15 percent of oil revenues and 30 percent of gas revenues.(iwa)