Regencies warned against blocking oil, gas fields
Regencies warned against blocking oil, gas fields
Moch. N. Kurniawan, The Jakarta Post, Jakarta
Minister of Finance Boediono warned oil and gas producing regions unsatisfied with the existing revenue split with the central government against launching a blockade on oil and gas operations in their areas as such a move could be disastrous for their economies.
"The blockade move would only scare investors away. We must realize that it's the people of the regions who will suffer most," he told reporters Tuesday.
"This is not the time to make threats... If there's any disagreement ... let's sit together to resolve the problem," he added.
He said that he would meet with the protesting regions to discuss the problem and try to prevent the blockade from happening.
Boediono was responding to the threat made by the association of oil and gas producing regencies (FKDPM) to blockade oil and gas operations in their respective areas unless the government revoked finance ministry decree No. 214/KMK.06/2002 on this year's oil and gas revenue split between the central government and regional administrations.
FKDPM senior official Dradjat Hadiwijoyo was quoted by the Kompas daily as saying that the deadline for the government to drop the decree was June 1, 2002.
The association said that oil and gas producing regions were not satisfied with the revenue split formula set under the finance ministry decree.
According to the Intergovernmental Fiscal Balance Law No. 25/1999, oil producing regions are entitled to 15 percent of revenue from the commodity (the central government gets 85 percent), and 30 percent from gas (the central government gets 70 percent).
Of the 15 percent oil revenue split, the oil producing regency administration will get 6 percent, while the remainder to be distributed between the provincial administration and other regencies in the province.
But FKDPM claimed that according to their calculations, based on the finance ministry decree, the producing regions will only get between 1 percent and 2 percent in oil revenue this year.
The oil and gas revenue split is part of the autonomy policy launched by the government in 1999.
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Point of dispute
Under the standard production sharing contracts, the government takes 85 percent of contractors' oil output and 70 percent of their gas output, giving the remaining to contractors. The government's 85 percent oil take includes 73.21 percent in the government's oil share and 11.79 percent in corporate tax payable by contractors, while the government's 70 percent gas share includes 46.42 percent in the government's gas share and 23.58 percent in corporate tax payable by contractors.
Under the Intergovernmental Fiscal Balance Law No. 25/1999, the central government delivers 15 percent of its oil share or its after-tax oil earnings and 30 percent of its gas share or its after tax gas earnings to the regional governments.
The 15 percent government oil share will then be distributed to producing regencies (6 percent), non-producing regencies (6 percent) and the province (3 percent). The 30 percent government gas share will be distributed to producing regencies (12 percent), non-producing regencies (12 percent) and the province (6 percent).
Calculations by the association of oil and gas producing regencies (FKDPM) made available to The Jakarta Post Tuesday indicated that a producing regency got 6 percent of the government's oil share or after-tax oil earnings. But, the earning accounts for only 2.74 percent of the government's oil take or before tax oil earnings. The association is demanding a producing regency be given 6 percent of the government's oil take on before-tax oil earnings.