Regencies, government settle oil revenue dispute

Regencies, government settle oil revenue dispute

The Jakarta Post, Jakarta

The central government and the oil and gas producing regions
agreed Saturday to establish joint teams to determine the
distribution of oil and gas revenue in a bid to end disputes over
the issue.

The agreement was reached in a meeting between the central
government and governors, mayors and regents from the country's
oil and gas producing areas in Bekasi, according to Antara news
agency.

Director general of oil and gas at the Ministry of Energy and
Mineral Resources Rachmat Sudibyo said the joint teams would be
established in each oil and gas producing province of the
country.

The team would consist of officials from the province, the
mayoralties and regencies in the province, the Ministry of Home
Affairs, the Ministry of Finance, state oil and gas company
Pertamina and Pertamina's production sharing contractors, Rachmat
said.

The teams will be expected to determine the amount of oil and
gas revenue to be distributed between the central government and
the regional administration and to help solve any disputes that
may surface over the issue, he said.

Under the Intergovernmental Fiscal Balance Law No. 25/1999,
which took effect early this year, the regions are entitled to
receive 15 percent of the government's oil revenue and 30 percent
of its gas revenue.

But many regions claimed that the formula presented by the
central government on the oil revenue and the division of the
revenue was confusing. Some of them suspected that the central
government had intentionally devised a confusing formula so that
the regions would be unaware of the amount of revenue they were
entitled to receive.

Secretary to the Communication Forum of Oil Producing
Regencies Irfan Nuranda Djafar complained that in the past, the
central government had always overlooked the regions' opinions in
formulating its oil and gas policy.

"We realize that oil and gas are vital commodities that still
need to be controlled by the central government. But as far as
revenue distribution is concerned, the central government should
consult with the regions," Irfan said.

The confusing method for calculating oil revenue was among the
issues raised by the forum during its campaign to reject the oil
and gas bill. But despite the protests, the House of
Representatives approved the bill in September and the government
implemented it last month.

Irfan said the forum no longer has any reservations about the
law as long as the central government was willing to involve the
regencies in formulating regulations for the execution of the
law.