Regions demand role in oil, gas body

Regions demand role in oil, gas body

Fitri Wulandari, The Jakarta Post, Jakarta

Oil and gas producing regencies are demanding a role in the new
oil and gas Implementing Body (Balak) to help preserve the
interests of the regions.

Drajat Hadiwijoyo, management director of the Consultation
Forum of Oil and Gas Producing Regions (FKDPM), said the regions
had the right to supervise oil and gas activities.

"As a regulator, Balak should treat regions as a counterpart
so that regions' interests can also be accommodated in the
agency," Drajat told reporters Wednesday.

However, Drajat said FKDPM had yet to decide whether they
wanted to sit on the board of directors or form an independent
supervisory board.

The government has recently issued a ruling for the
establishment of the Implementing Body, which will take over the
role of state-owned oil and gas firm Pertamina as the highest
authority in the sector.

The authority would include awarding oil and gas concessions,
signing contracts with oil and gas contractors, supervise
operations and regulate the industry.

The agency is headed by a chairperson who is assisted by a
vice chairperson and several deputies, all of whom are industry
experts.

Last week, Rachmat Sudibyo, the director general of oil and
gas at the Ministry of Energy and Mineral Resources, was
appointed chief of the Implementing Body.

Balak's formation is the consequence of the new Oil and Gas
Law No. 22/2001, which liberalizes the sector and ends
Pertamina's long-held monopoly.

The regions' demand for a role in the Implementing Body is
part of their latest efforts to obtain a greater share of oil and
gas revenues.

"The existing oil and gas revenue split has never been
discussed with the regions. If regions are represented in Balak,
regions could also decide a fair revenue split," Drajat said.

Syaukani, the regent of Kutai Regency in East Kalimantan, was
of the same opinion, saying that "Balak should help regions to
get their fair share as stipulated by the law."

Syaukani, who is also the chairman of the Association of
Indonesian Regency Administrations (Apkasi), urged the
Implementing Body to be more transparent when calculating revenue
shares for the regions.

In June, the regions threatened to blockade oil and gas
operations in their areas to protest the existing revenue split.

Under the Intergovernmental Fiscal Balance Law No. 25/1999,
the central government delivers 15 percent of its oil share and
30 percent of its gas share to regional governments.

However, FKPDM claimed that according to their calculations,
oil and gas producing regencies obtained smaller portions.

In addition, Drajat said that by having representation on the
Implementing Body, the regions could also push for compensation
for environmental damage resulting from the oil and gas
activities in their respective areas.

"As of now, regions bear the brunt of destructive oil and gas
exploration. We need some kind of compensation to restore our
environment."