Jakarta – Extractive Industries Transparency Initiatives (EITI) is a global initiative that encourages transparent and accountable governance of the oil, gas, and mining sectors, implemented in 56 countries, including Indonesia. EITI Indonesia issued a report on “Contract Transparency in Indonesia: Assessment of Benefits, Challenges, Risks, and Opportunities” in 2021. The report assesses Indonesia’s existing legal framework on public information transparency that facilitates the disclosure of extractive contracts/licenses, focusing on the challenges, benefits, risks, and opportunities in promoting greater contract/license disclosure.

Publish What You Pay (PWYP) Indonesia, which is also part of the EITI Indonesia multi-stakeholder group (MSG) forum, held a public discussion entitled “EITI Contract Disclosure Initiative in Indonesia: Benefits, Challenges, Risks, and Opportunities” on Friday (5/20) online. This discussion is also in the framework of Open Government Week (OpenGovWeek), which takes place on May 16-20, 2022. Three speakers attended the debate: Giri Taufik, a Researcher at the Indonesian Center for Law and Policy Studies (PSHK) and author team of the EITI Indonesia report, Sampe L. Purba, Expert Staff in Natural Resources Economics, Ministry of Energy and Mineral Resources (MEMR), and Marsya M. Handayani, Researcher at the Indonesian Center for Environmental Law (ICEL).

Aryanto Nugroho, PWYP Indonesia’s National Coordinator, opened the discussion by explaining the purpose of this discussion, namely to look back at the results of the study report that EITI Indonesia has prepared in context with today’s conditions. In addition, Aryanto explained that this discussion was also celebrating OpenGovWeek, considering that Indonesia was also an initiative and implementing country.

“We want to look back at the results of the EITI Indonesia report study that has been compiled. To what extent are the legal framework, opportunities, challenges, and benefits when the contract/permit documents are opened? We want to get input from the government, business actors, and civil society why this should be opened, what the requirements are whether this should be published or closed, and others,” said Aryanto.

Giri Taufik, an Author Team of the EITI Indonesia Report, explained that Indonesia in 2010, Indonesia committed to implementing the EITI disclosure standard through Presidential Regulation (Perpres) No. 26 the Year 2010. The EITI disclosure initiative encourages transparent and accountable disclosure in the extractive industry. The new EITI Indonesia standard in 2019 (EITI Requirement 2.4) mandates the obligation to disclose all contracts and licenses and their amendments issued since January 1, 2021.

According to Giri, several steps must be taken by Indonesia to implement the mandate, which is of particular concern to stakeholders first, whether the laws and regulations in Indonesia allow the disclosure of contract and license documents. Second, about the risks, especially from the government side, whether there will be risks caused by opening contract and permit documents, and how to mitigate these risks.

Giri said that contract and permit documents are open documents based on the Law on Public Information Disclosure (KIP) which mandates that Public Bodies must provide Public Information at all times. Giri emphasized in article 11, paragraph 1, letter (b) and letter (e) that the Public Information in question is the result of the Public Agency’s decision and its consideration and the Public Agency’s agreement with a third party. Then, the primary argument supporting the openness of contract and permit documents is the 1945 Constitution Article 33 paragraph (3) which positions natural resources are public goods, not private goods.

“The debate that occurs is whether this extractive industry contract is a private document that is confidential or a public document. Based on the legal regime that we have, especially those governing mining and so on, mandates that the power of natural resources is owned by the state and managed by the state, so it is public, so it should not be a private good,” said Giri.

Giri also explained some benefits of encouraging the disclosure of contract and permit documents. The benefits of this disclosure initiative can be divided into three beneficiary actors: the government, business actors, and the community. For the government this disclosure initiative can help the government in the contract negotiation process to get better negotiations, improve the investment climate, and encourage government accountability in realizing good governance. For businesses, the Environment, Social, and Governance demands from investors also manage public expectations of the rights and obligations of companies and communities, mitigating and detecting conflicts early on and knowing the rights and obligations of industrial activities that will take place.

In terms of current challenges in encouraging this initiative, Giri divides it into the oil and gas (oil gas) and mining sectors. In the oil and gas sector, there is no Information Documentation and Management Officer (PPID) in the SKK Migas structure. As well as the absence of publicly accessible contract documents, the Supreme Court (MA) declared oil and gas contracts as information that is not required to be provided. As for the mining sector, contract documents and licenses are included in exempt input based on Consequence Test No. 001/2020/PPID.

In terms of risks in the disclosure of contracts/permits, Giri divides them into four potentials: the potential for lawsuits, the potential for business competitiveness, the protection of natural resource information, and the potential for disruption in mining operations. According to Giri, these potential risks can be managed using a phased approach by determining each stakeholder’s chances, risk level, and risk mitigation if the contract/permit document is disclosed. Giri closed his presentation by providing recommendations from the report that had been compiled, namely encouraging intensive discussions between MSG from both the government, community, and business actors to discuss it and then identify each risk and how to mitigate it. There is a modification to the data disclosure platform provided by MEMR, such as MODI, by adding a download menu for contract/permit documents based on a method mutually agreed upon by the MSG. Also include oil and gas contract disclosure as part of the National Action Plan for Open Government Indonesia (OGI) and establish PPID in SKK Migas.

Sampe L. Purba, Expert Staff on the Natural Resources Economy of the Ministry of Energy and Mineral Resources, responded that the one data portal developed by the Ministry of Energy and Mineral Resources, such as MODI and One Map is one of the government’s initiatives in information disclosure which is an attraction and strength to attract investors and as a form of accountability to the community. According to Sampe, there needs to be a deepening discussion related to contract disclosure models in investor countries which aims to determine how the information disclosure model can benefit the government, society, and business actors. Secondly, Sampe emphasized that there needs to be education related to understanding contract documents for the first stakeholders, namely the government, business actors, and civil society organizations so that there is one understanding between stakeholders in understanding the context of the contract and permit disclosure.

“One more thing as part of our future enrichment is about countries, whether producers or consumers, to what extent we can see the interest in investing based on the openness of contracts in investment destination countries such as Indonesia,” Sampe added.

Marsya M. Handayani, a Researcher at the Indonesian Center for Environmental Law (ICEL), responded that the KIP Law has regulated that Public Information is open and accessible to every information user, except for exempted information. Marsya agreed with Giri that there are public nuances in the openness of contracts/permits based on Article 33 paragraph (3), namely, the earth and water and the natural resources contained therein are controlled by the state and used for the greatest prosperity of the people. According to Marsya, the principle of openness is also part of human rights, where there is a right to seek and receive information which is a civil and political right.

Marsya also mentioned that the Coal and Mineral Law explains that the government or regional government, following its authority, is obliged to connect the mining phase plan in the mining license area and the mining business license for mining production operations to the public openly. Marsya added the perspective of civil society organizations that the openness of this contract/permit will encourage public trust in the government to manage natural resources as well as possible for the benefit of the community.

“For the community, the openness of contracts and permits will be needed as a basis for full public participation, which means that the community also has the right to give opinions and be involved in the determination process in mining operations. In addition, the community can also carry out joint monitoring to monitor the impacts of mining, considering that the number of mining inspectors is not proportional to the permits issued,” said Marsya.

The EITI disclosure initiative in Indonesia still has a long debate, especially in encouraging the disclosure of contract and permit documents which is the mandate of the latest EITI standard (2019 EITI 2.4 Requirements). Stakeholders can take advantage of the existence of this MSG, especially to encourage collaboration between stakeholder groups in improving extractive sector governance.