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Jakarta Post

Editorial: Cleaning up the mining ministry

  • The Jakarta Post

    The Jakarta Post

  /   Wed, October 29, 2014   /  10:30 am

President Joko '€œJokowi'€ Widodo'€™s appointment of Sudirman Said, an anticorruption activist and good-governance champion, as energy and mineral resources minister only reaffirms his priority to clean up the country'€™s bureaucracy.

With former energy and mineral resources minister Jero Wacik a corruption suspect and former Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) chief Rudi Rubiandini now behind bars for corruption, the Energy and Mineral Resources Ministry should be one of the top targets of Jokowi'€™s reform drive.

It is reassuring to know that Sudirman, 51, fits this Cabinet portfolio well. Even though he is an auditor by training, he also gained a master'€™s degree in business management from George Washington University and has built years of experience in state and private oil companies as well as demonstrating his managerial and leadership qualities in many organizations.

He was one of the founders of the Indonesian Transparency Society, an antigraft organization, and the Institute for Corporate Governance.

Sudirman served for almost two years as a vice president at state oil and gas company Pertamina, where he was in charge of reforming its supply chains, then considered one of the most inefficient and most susceptible to corruption.

He quit in 2009, reportedly due to strong lobbying by the oil mafia. He then moved on to serve as a vice president at the Petrosea oil firm and last as president director of the state-owned Pindad weapons factory in Bandung.

Sudirman rightly asserted after being installed as minister that his top priority was to restore the trust of the public, notably in oil firms and mining companies, in his ministry.

This task requires him to clean up and expedite the licensing system in the petroleum industry and general mining, accelerate the renegotiations of mining contracts and stop the so-called mafia in oil imports and exports.

Next is determining the legal status of several oil and gas production sharing contracts (PSCs) that will expire in the next five to seven years. The most urgent among them is the contract for the Mahakam block in East Kalimantan, not only because this concession will end in 2017 but also because this field accounts for almost one-third of the country'€™s gas output.

Given the long-term nature of investment in the hydrocarbon sector, it would be better if Sudirman could navigate the '€œpolitical minefield'€ at the House of Representatives to establish a regulatory framework whereby the legal status of oil and gas concessions can be decided 10 years before expiry.

Whatever policies or legal instruments he issues in the mining sector, they should always be with the national interest in mind, but should not necessarily smack so inordinately of nationalistic sentiment so that foreign investors are scared away.

Sudirman faces some very tough tasks, not to mention the immediate job of calculating the most appropriate price of subsidized fuel to implement the government'€™s plan to cut energy subsidies.

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