Publish What You Pay (PWYP) Indonesia urges that government should following up recommendation from Reformation Team for Governance of Oil and Gas on issues related to the participating interest and formulation of upstream side of oil and gas sector.
Maryati, national coordinator of PWYP Indonesia, said that PWYP Indonesia shared similar view with the team recommendation on the need for a specific State Owned Enterprise (BUMN) that responsible for Upstream aspect of the industry.
Aryanto Nugroho, Advocacy Coordinator of PWYP Indonesia added that based on a study by Indonesia Center for Environmental Law (ICEL) and PWYP Indonesia, in the new model of oil and gas governance, the cost recovery will be managed by that specific BUMN and highlighted the need for transparency of cost recovery.
Current process of allocation and detail of cost recovery that is unclear and not transparent , according to Aryanto, is suspected to create opportunity for corruption practices. Such practices was affirmed by finding of Financial Auditing Agency (BPK) in 2013 on allegation of misconduct payment of cost recovery up to $ 221,5 million between 2010-2012. “Transparency is a key to improve accountability of calculation of cost recovery that should be paid to the oil and gas contractors” explained Aryanto.
Aryanto added that problem that usually occurred regarding local entitlement to the participating interest in oil and gas block is local government has not enough financial capacity to take the available share except by cooperate with private sector. This problem, said Aryanto, mislead the original goal of participating interest which is to increase participation, and provide bigger benefit to the local government, local government owned enterprise (BUMD), local community.
In the CSO’s version of Oil and Gas Law that is currently revised, our recommendation is BUMD able to borrow funds from government-based financial agency or by releasing bond to gather public fund. Also, BUMD that eligible to get participating interest must be BUMD that 100% owned by local government, and there is no need for local government to take the whole 10% available share” said Aryanto.
Publish What You Pay Indonesia
Maryati Abdullah
National Coordinator