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.