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."