To be reported on May 17, 2015 and thereafter

Civil Society Coalition that is concerned on issues of Oil and Gas and Mining, Publish What You Pay (PWYP) Indonesia supports the action of the President who ordered the Minister of Energy and Mineral Resources to conduct a thorough investigation audit of Pertamina Enegy Trading Ltd (Petral). The step is absolutely necessary to uncover various allegations of irregularities in crude oil imports and leakage of the State budget so far.

Maryati Abdullah, Coordinator of PWYP Indonesia said, she supports the government’s efforts to immediately conduct a complete audit in the form of an investigative and forensic audit of Petral. The audit is related to management, budget management, crude oil imports and asset management. Maryati hopes that the results of the second audit report will not only be a document, but must be exposed to the public and followed up with in the legal domain.

This, according to Maryati, is to provide certainty to the public and restore public confidence in law enforcement in the oil and gas sector. “Therefore, we hope that the results of the investigative and forensic audits should uncover the actual practices that are suspected as oil and gas mafia and also to find out where the flow of crude oil imports has been flowing. all this time, “he said Sunday (5/17).

As reported by the Minister of Energy and Mineral Resources on Friday (15/5), the first three months since Petral’s role was replaced by Pertamina Integrated Supply Chain (ISC) in crude oil imports, there were savings of 22 million US dollars. If averaged at the same relative level of needs and prices, the savings could reach 88 million US dollars in a year (reaching 1.14 Trillion Rupiahs, with an exchange rate of 1 USD = Rp 13,000).

Maryati added, the investigative and forensic audit teams should also have involved a number of experts from both internal and independent circles. “We ask the audit team to also involve law enforcement agencies such as the Corruption Eradication Commission (KPK) and the Financial Transaction Reports and Analysis Center (PPATK),” said Maryati.

Maryati explained, through investigative and forensic audits, the improvement in the management of crude oil imports could be completely improved, and not to create a new ‘rent’ mafia, which harms public resources. “The management of crude oil imports must be as transparent and accountable as possible, the public must be able to monitor and access information. The role of the DPR must also be strengthened in conducting oversight, because the DPR also plays an important role in determining the allocation of funding for energy subsidies each year,” he explained.

Maryati added, beside of Petral, it was also interesting to see the government’s response in following up on recommendations from the report of the Oil and Gas Governance Reform Team regarding the format of governance in the upstream oil and gas sector and participating rights.

Regarding the governance format, continued Maryati, the PWYP Indonesia Coalition had the same idea with the recommendations of the Reform Team, namely the existence of a Special SOE to manage the upstream problem. “We have prepared a revision of the Civil Society version of the Oil and Natural Gas Law, which is related to the upstream oil and gas institution, which should be managed by a state-owned (specifically) SOE,” concluded Maryati.

Aryanto Nugroho, Advocacy Coordinator of PWYP Indonesia added, in a study compiled by the Indonesian Center for Environmental Law (ICEL) and the Indonesian PWYP Coalition, in the new upstream oil and gas institutional model, cost recovery would be carried out by the (special) managing SOEsand emphasized the aspect of transparency costs recovery said.

The closure in the determination and detail of cost recovery so far, according to Aryanto, is suspected to provide opportunities for collusion and corruption practices as confirmed in the BPK audit findings in 2013 where there were alleged irregularities in cost recovery payments of USD 221.5 million or Rp. 2.25 trillion in the 2010-2012 period. “The application of transparency is the key to increasing the accountability of cost recovery calculations paid to PSC contractors,” explained Aryanto.

Aryanto added, a problem that often occurs related to regional rights in participating interest in an oil and gas block is that the regions are unable to take the entire participating interest right, unless they hold a private sector. This, according to Aryanto, made the goal of participating interest, which is to involve, as well as provide benefits to local governments, regional companies and local residents unattainable.

“In our study in the revised version of the Civil Society’s Oil and Gas Law, we recommend that BUMDs may borrow from financial institutions from the Government or issue bonds to raise funds from the public. In addition, BUMDs that can take participating interest are BUMDs whose capital ownership is 100% controlled by the Regional Government, so it does not have to be a maximum of 10% taken by the region but utilized as optimal as possible “said Aryanto.

Publish What You Pay Indonesia

Maryati Abdullah
National Coordinator