Wednesday, December 4, 2013

“The concept, role, and institutional form must accord with the constitutional mandate.”

The Constitutional Court (MK) in its decision Number 36/PUU-X/2012 states that oil and gas are important production branches for the country and control the lives of many people. The reason is oil and gas as natural resources contained in Indonesia’s earth and water. Of course, the natural resources must be controlled by the state and used as much as possible for the prosperity of the people, as referred to in Article 33 paragraph (2) and paragraph (3) of the 1945 Constitution.

“Thus, it can be said that this upstream oil and gas sector institution has an important mandate,” said Maryati Abdullah, National Coordinator of Publish What You Pay Indonesia (PWYP), a Civil Society Coalition for Transparency and Accountability for Extractive Resources Management in Jakarta, Wednesday (Wednesday) 4/12).

Furthermore, the woman who is familiarly called Marry said the mandate of the upstream oil and gas sector must be manifested in five functions. He detailed, that function was the mandate to hold policies (beleid) and management actions (bestuurdaad), regulation (regendaad), management (beheersdaad), and supervision (toezichthoudensdaad).

Therefore, according to Marry, institutions are a very important issue in the management of oil and gas. “The concept, role and form of institutions in the upstream oil and gas sector are following the constitutional mandate. “In addition, it can work effectively, efficiently in carrying out the oversight function of the implementation of transparent and accountable profit-sharing contracts,” he stressed.

As is known, the institutional arrangements for the upstream oil and gas sector in Indonesia have undergone several changes. The upstream oil and gas sector was once driven by Pertamina, then it was replaced by BPMigas through Law Number 22 Year 2001 concerning Oil and Gas.

Finally, through a decision on the request for judicial review of the Oil and Gas Law against the 1945 Constitution, the Constitutional Court stated that the Oil and Natural Gas was unconstitutional so that it ordered its replacement. Now, SKK Migas is under the coordination of the Ministry of Energy and Mineral Resources through Presidential Regulation Number 9 Year 2013 carried out this function until new regulations were formed following the Constitutional Court’s decision.

Principal Specialist Deputy for SKK Migas Business Support Control, Sampe L. Purba, said the institutional model for the upstream oil and gas sector can be selected from three models. First, the government is directly a party to the contract. The second model, the government assigns one national BUMN. Meanwhile, the third model is the Oil and Gas Law to form and assign an agency that is given the authority to exercise mining rights.

“Of course, each model has advantages and disadvantages. The institutional management model in exploiting natural resources varies by country. Also keep in mind, there is no one model that is suitable for all circumstances, “said Sampe.

Sampe said the first model showed the real and direct involvement of the state in oil and gas management. However, this has the consequence that there will be a degradation of the role of the state as the holder of public sovereignty. In addition, the state will also have an equal position with investors in civil relations.

The country will also be exposed to contractual risks, including its assets and wealth. The weakness of this model, according to Sampe is the lack of flexibility in responding to commercial transactions.

The second model, he said, according to Sampe would optimize economic opportunities in the management of oil and gas resources in Indonesia. However, this model has a burden on SOEs to carry out non-commercial tasks and functions.

As a result, SOE competitiveness with similar companies on a global level will be reduced. “If it is carried out by a BUMN, there may be a conflict of interest between being a business actor and a regulator. On the other hand, if you want to form a new SOE, you also need huge resources to support it, starting from the network, assets, financials, to employees, “Sampe added.

Sampe also explained that the third model was adopted from the Financial Services Authority regulated by Law Number 21 Year 2011. He also said, previously there had been a similar institution governed by Law Number 2 Year 2009 concerning Export Financing Institutions.

According to him, the third model mandated that the Oil and Gas Law would later regulate the state oil and gas control. Then, the control is held by the government in the form of a mining authority. Furthermore, management and exploitation rights rest with the national oil and gas authority.

“So it could be that the national oil and gas authority adopts the authority of financial services,” he concluded.

Source: hukumonline