Tuesday, December 24, 2013
Jakarta, indoPetroNews.com – Revision of the Oil and Gas Law has not yet been completed. While BP Migas (the Executive Agency for Upstream Oil and Gas Business Activities) was dissolved by the Constitutional Court (MK), 13 November 2013. The Constitutional Court in its decision Number 36/PUU-X/2012 (Decision of the Constitutional Court 36) has decided the provisions relating to unconstitutional BP Migas. In the decision, BP Migas was declared dissolved since the verdict was pronounced.

Dissolution of BP Migas in the Constitutional Court’s assessment, its role is carried out by the government relevant ministries. Furthermore, the Court decided, all rights and authority of BP Migas after this decision, carried out by the State-Owned Enterprises established by the Government. This is where the discourse and debate arose again, whether BP Migas or now “SKK Migas” will stand alone under the government, become an institution with State-Owned Enterprise, or into a part of Pertamina.

According to Hikmahanto Juwana, Professor of International Law from the University of Indonesia, to understand the answers to the institutional format after the Constitutional Court’s decision, it needs to be understood, there are three models of the relationship between the state and business actors in natural resource management that have been in force in Indonesia.

The first model is the contractual relationship model between the State and the Business to Business Actor (Government to Business). This model was developed in the general mining sector based on Law Number 11 of 1967 (Law 11/1967). An example of this model is the Contract of Work between the State represented by the Government and PT Freeport Indonesia or the State with PT Newmont Nusa Tenggara.

It is just that the contract regime under Law 11/1967 has been abandoned and replaced with a permit regime based on Law Number 4 Year 2009 concerning Minerals and Coal (Law 4/2009). Law 4/2009 replaces Law 11/1967. In a contractual relationship, the position of the State is equal to that of business people. A relationship that wants to be repaired by the applicants for judicial review of the Oil and Gas Law, although in the Constitutional Court’s decision the reality is not the case.

The second model is the contractual relationship between entities formed by the State but separated from them. This entity remains under state control through the government. In this second model, the entity appointed by the state receives a delegation of authority from the state. This entity is contracting with the contractor. Pertamina before the entry into force of the Oil and Gas Law and BP Migas was the realization of this model. The two models, according to Hikmahanto, are contract regimes adopted by a country for the management of natural resources.

The final model, he added, is the state domiciled as the licensor or concession of contractors and business actors. This model is known as the permit regime as adopted in Law 4/2009. In the permit regime, the state’s position as the licensor is higher than that of the business actor. Countries in the vertical position above, not horizontally equivalent to the Contractor. “In a system of equality contracts between the parties, including the state, is a prerequisite given that a contract requires an element of the agreement,” he said

BP Migas Minus or Pertamina Seahorse Minus?

Hikmahanto, when met by IndoPetro on his campus (27/11), said that he was more inclined to substitute BP Migas or the new “SKK Migas” institutions to carry out activities that represented the government. “Unlike Pertamina, it (the new institution) does not perform the legislative function. The legislation is the domain of the ministry or director-general of oil and gas.

The question is, can the new agency conduct a tender for the oil and gas block? Hikmahanto explained the new institution could have done it (tender block. Because so far it was the government that did it, but the contract was signed by the agency (SKK Migas). “But then why not this institution. But with records must be maintained, because for example about tenders like that, if the people are not careful, they can “play” too. So they must be protected in term their governance, “he explained.

So with a model like that, explained Hikmahanto, it was as if the new institution was like Pertamina in the past. ‘The mining area (WK) was handed over to this institution, for those who did it later. After that, after they have been broken (finished the contract), they will sign it. Those who carry out the tender process, sign the contractor. Later it could be, if there is oil raised, the part is for the private sector, yes for the private sector, but if the part is made for the government, then this institution will sell it again. this institution, after he got his money, then went into the state treasury. For example like that, “explained Hikmahanto.

So BP Migas is plus, but Pertamina is a minus horse,” he said.

Pertamina seahorses (Pertamina according to Law Number 8/1971), he continued, had 4 roles. First, the division between upstream and downstream. It is not, it is just upstream. Upstream, then, there is its role as regulator, government representative, and operator, right? So I say it is a minus.

Supervise the revision of the law through the proposed draft

Meanwhile, Maryati Abdullah as PWYP (Publish What You Pay) Coordinator, an NGO (Non-Government Organization) which oversees around 38 NGOs (non-governmental organizations) in Indonesia, also took the attention and actively worked out the institutional arrangements in the Revised Oil and Gas Law. Even with the consortium of institutions, they helped design the institutional arrangement for the Oil and Gas Law.

According to her, this attention is important, considering the Oil and Gas Law is a frame of work regulation related to governance. “We are guarding there because the average policy in Indonesia is positive law. So we also follow the ongoing process. Because consistently, like it or not the policy revision of the Act will have an impact on the future of local governments and local communities, “he said.

PWYP itself, according to Maryati, in addition to being concerned about the study matter, also produced three policy briefs. Namely Transparency, participation, and public information openness. Then the issue of regional interests in the Oil and Gas Law, and the contents of the petroleum fund.

Explained Maryati, before the Constitutional Court’s decision related to the dissolution of BP Migas, the agency had planned and conducted a study related to institutional governance in oil and gas. “Because it has always been politically attractive for those who want to go to Pertamina. After the Constitutional Court’s decision, the demands were even harder, “he said. Now Maryati continued, she and her friends are still conducting studies to more clearly position it. But clearly, the institutional position of PWYP has encouraged a more transparent and accountable process.

Regarding the proposed institutional direction, Maryati still refused to explain. But certainly, he explained, just follow the Constitutional Court’s decision, to be safe. Let it not change. Secondly, of course, the form of a business entity, as the Court’s decision. “Even the Court mentioned SOEs,” Maryati emphasized.

“If the problem is whether Pertamina or the new one is up to you. That is a further part after this law. Because the law does not have to mention the name of the company. We can also regulate the article here, in the form of SOEs or what it is, what is left to be regulated in government regulation (PP). If we are more a form of business entity because he can run business to business. That’s the first criteria. Why? Because the institution must be able to negotiate in the context of the interests of the state for the greatest prosperity of the people. Then, if a business entity, in the financial clause of a business entity, is audited by a business entity, not by a legal entity, “said Maryati.

Regarding the function of state-owned enterprises which usually tend to be profit-oriented (profit maximization), Maryati straightened out. “The task of the new SOE will be to manage natural resources, he holds the mandate of the state. Make maximum use of it for the prosperity of the people. This means that if he is a business entity, he must seek benefits, but in terms of accountability, he must continue to be audited as a form of state finance like other SOEs. Because of our country’s finance, the SOE is included in the scope of state finances, so it must be audited by the BPK. And if there is a loss, it can be subject to anti-corruption law,” she explained.

“As long as the company is owned by the state, and state shares are still high, it means that it must give a lot of dividends to the state,” said Maryati.

Related to the institutional issues carried by Maryati and her friends, there are some things which according to her are also important to be considered, such as how to fill the institution. Including the election of its chairman, commissioner, and so on. According to Maryati, all of that must go through the fit and proper test of the House of Representatives. If necessary there is public too. There is a monitoring mechanism at this institution. Also the supervisor. “If possible, people should be new. Then what form of accountability to the state, “she concluded.

Source: indoPetroNews.com