Energy and Mineral Resource Minister Purnomo Yusgiantoro has denied the allegation that the United States aid agency USAID helped put forward Western interests in the controversial 2001 amendment to the oil and gas law.

"I had no link at all with USAID and other foreign sponsors during the drafting of the amendment," Purnomo told The Jakarta Post late on Thursday prior to a hearing with the House of Representatives.

Purnomo, who was educated in the United States, was in the same post when the amendment was enacted in mid 2001. He refused to give details on the process and on any role played by USAID in influencing the amendment.

His predecessor, President Susilo Bambang Yudhoyono, who served as the oil and gas minister between 1999 and 2000, was also educated in the United States and was also intensively involved in drafting the amendment.

As reported earlier, lawmakers in a special inquiry on the management of oil and gas, are pointing to alleged irregularities involving USAID in influencing the amendment.

Head of the House's inquiry committee Zulkifli Hasan said lawmakers had received reports that USAID had channeled US$21.5 million as a "supporting" fund to encourage lawmakers to amend the oil and gas law, with foreign interests in mind.

Zulkifly said the $21.5 million was channeled between 1999 and 2000 for launching an intensive effort to amend the law.

"The amended law has reduced the role of the state in the management of oil and gas. It now serves more the interest of traders and contractors," Zulkifly said.

However, Zulkifly refused to name the sources who reported the allegations.

The team's deputy head Max Sopacua said the team would investigate the basis of the amendment to the law, as lawmakers were suspicious of possible collusion.

The House has formed a special inquiry committee to question the government's policy in raising fuel prices, following strong public protests and allegations that billions of dollars in revenue from the oil and gas sector were lost through inefficiency and corruption.

According to analysts, the amendment resulted in the liberalization of the country's oil and gas sector, which had been dominated before 2001 by state oil and gas company PT Pertamina.

The United States Embassy, however, denied in a statement any allegations of improper influence by USAID in assisting the government in reforming the energy sector.

The Embassy said under the terms of its agreements with the government, the United States provided technical assistance and training on energy sector reform.

"Inputs on best practices and international experience on these issues were designed to be helpful and contributed to the process and all the decisions about any changes to the law or policy were made by the government (of Indonesia) as the result of its own processes."

"All USAID funds are utilized and controlled in accordance with USAID regulations, and audited regularly," said the Embassy.

In early 1999, USAID was requested by Kuntoro Mangkusubroto, the then-energy and mineral resources minister, to help review a draft oil and gas law, which was prepared by the government but rejected by the House.

USAID responded positively and disbursed a budget of $4 million a year and a total budget of $20 million over 5 years. These budgets were for funding long-term technical assistance teams, workshops and training.

The agency, according to the Embassy, helped review the draft in term of its consistency, implementability and proposed phases of implementation.

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