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he Regional Representatives Council (DPD) recommended the government and the House of Representatives amend the 1945 Constitution and review the 2001 Oil and Gas Law and the 2009 Mineral and Coal Mining Law in an endeavor to improve the government’s revenues and provide a fair fiscal balance between the central government, and local administrations in the mining sector.

In the conclusion of its three-month political investigation into the exploration of natural resources here on Tuesday, the DPD’s special committee found a number of constitution violations and injustices in natural resource exploitation, which it said has benefited miners and the central government but contributed less to regions and the people at the grass-roots level due to multiple interpretations of the Constitution as it was shown in the two laws.

“These findings and unfair practices are the legal and political basis for the investigative committee to recommend the House and the government amend the Constitution and revise the two laws and relevant regulations on the fiscal balance between the central government and regions where the natural resources are explored and mined,” special committee chairman Abdul Azis said.

According to the special committee, Chapter 33 of the 1945 Constitution has to be amended by changing the phrase that all natural resources are controlled by the state into a new phrase that all natural resources are owned by the state and utilized to improve the people’s social welfare.

He added the DPD would bring the two laws to the Constitutional Court for review if the House and the government declined to revise the law.

Special committee members Nurmawati Dewi Bantilan and Abdul Gafar Usman said revision of the two laws was aimed at upholding the state’s sovereignty over and ownership of natural resources and therefore, the oil and gas regulator BPH Migas had to be reorganized or replaced by a state-owned enterprise in respect of the business-to-business principle and to maximize the state revenue from resource exploitation.

Nurmawati said the recommendations were part of the grand design made the special committee to maximize the state revenue in the mining sector and after the two laws were revised, all work contracts with foreign miners would have to be reviewed.

The government receives 85 percent from oil production and 30 percent from gas production under a production scheme with oil and gas companies, where all operating costs are refunded by the government. However, the producing regions only receive 15 percent from oil production received by the central government and 30 percent from gas production. The producing regions’ shares from oil and gas production were too small and not fair ,given the damages caused by oil and gas production activities on the environment. He said that the royalties received by the government from mining operations were also too small and did not reflect fairness. It was completely unfair if the government received only a 1-percent royalty from gold miner PT Freeport McMoran Indonesia, which has devastated the environment in Mimika, Papua, he said.