Performance of the newly elected Director General of Oil and Gas, I Gusti Nyoman Wira Atmaja and Director General Mineral and Coal, Bambang Gatot, are highly expected by public. Publish What You Pay (PWYP) Indonesia reminds that both Directorate Generals must prioritize their focus to numbers of outstanding tasks.
Maryati Abdullah, National Coordinator of PWYP Indonesia mentioned that in Oil and Gas Sector, the new Directors General have to put Nawa Cita as guidance for management of Oil and Gas in Indonesia, particularly related to the energy security and decreasing of national oil reserves. “It is crucial that the new Directorate General secures revision of Oil and Gas Law and make sure that all substances works accordingly to the new constitution and prioritize national interests” Maryati said (Sunday, 10/05).
According to Maryati, Draft of Oil and Gas Law must accommodate some transformation agenda, such as Institution Model for Downstream Sector of Oil and Gas that allows Check and Balance Processes and adequately adopts Constitutional Court decision. Next is securing rights of information, participation and public access on industry’s transparency along the business process, such as contracts’ transparency, lifting information, national revenues, and trading of crude oil. ”Establishment of Sovereign Wealth Fund and Petroleum Fund as Oil and Gas revenues that are separated and accountably managed to support Energy Development and People’s welfare agenda. Also it is important to put enough concern toward public rights and concern, include rights of traditional communities, on whether to extract or not to extract Oil and Gas Reserves, Maryati explained.
The Directorate General of Oil and Gas must become the spearhead in the effort to prevent Oil and Gas mafia which are suspected to take advantages in Oil and Gas business. Especially related to rent seeking practice in the management of participating interests in oil and gas for local government. “According to data from Upstream Body of Oil and Gas (SKK MIGAS), at least there are 25 of Oil and Gas Contract that will be expired in the next five years, which means that issues related to local interest to participate in Oil and Gas industry will escalate, Maryati said.
Ariyanto Nugroho, Advocacy Manager of PWYP Indonesia explained that for Mineral and Coal Sector, the new Directorate General must emphasize their focus on company duty on hilirization and adding value of their Mining Product, renegotiation of Mining Contract, and rearrangement of Mining Permits, and Enforcement of Environmental and Social Standard in mining operation. Directorate General Mineral and Coal has to complete renegotiation contracts in mining and coal into transparent.
Ary added, until renegotiation deadline stated by Mining Law No. 4 2009, in fact, only one contract of work (KK) holder that has signed the amendment. 20 KK and 21 Coal Contracts (PKP2B) have agreed and signed MoU, 8 KK and 12 PKP2B have only agreed part of MoU, 5 KK and 9 PKP2B have only agreed on amendment draft from 34 KK and 73 PKP2B. “Renegotiation particularly related to 6 strategic issues: Scope of Working Area, Continuation Mining Operation, National Revenues, Duty on Hilirization, Duty on Divestment, Duty to use local content and Resources” according to Aryanto.
Regarding to the issue on Mining Governance, Agung Budiono, Program Manager of Forest and Land Governance PWYP highlighted that the Government has to solve arrangement of 4,296 mining permits that are still categorized as Non Clear and Clean Mining Permits. Also, overlapping between Mining, Forest and Plantation areas, implementation of Reclamation and Post Mining Guarantee. Non Tax Revenue that has not been optimized, such as Mining Royalty and Land Rent must also be considered by the new Directorate General. PWYP Indonesia calculated that there are potential lost from Land Rent payment of 919.18 billion rupiah in 2009 to 2013 just from 12 provinces, Budiono said. Furthermore, according to Budiono, the newly elected Directorate General of Mineral and Coal has to continue the cooperation with Anti Corruption Commission (KPK) in the coordination and supervision task force for mining sector.
Maryati added that both directors must ensure commitment to Implement Extractive industry Transparency Initiative (EITI) as stated in President Regulation No. 26 2010 on Transparency of National and Regional Revenue from Industries of Extractive Mineral, Gas and Mining Sector. “Ministry of Energy and Mineral Resource hold a very significant role to restore Indonesia status as EITI compliant country that was suspended by International EITI Board on February 2006 from its failure to timely publish 2012 and 2013 EITI report” Maryati highlighted. EITI has successes to improve Governance of Oil, Gas and Mining Industries by its ability to be transparent on information on Local and National revenue. The initiatives led by coordination Ministry of Economy is also able to publish production data, Domestic Market Obligation Data as well as Tax Revenue of each oil, gas and mining companies. Further information about EITI can be accessed through www.eiti.ekon.go.id.
Contact Person:
Maryati Abdullah (0821 2523 8247)
maryati@rrcindonesia.com/pwyp150128