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Oil, gas bill in limbo again ahead of elections
The long-delayed oil and gas bill appears to be in limbo once again after the government avoided raising the matter at a forum intended to discuss the future of the much-anticipated legislation.
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An oil and gas worker climbs a ladder at a refinery. (Shutterstock/File)
The long-delayed oil and gas bill appears to be in limbo once again after the government avoided raising the matter at a forum intended to discuss the future of the much-anticipated legislation.
The forum on the bill was held recently by a local news outlet in Jakarta and was attended by prominent guests from the government and private sector, including Deputy Energy and Mineral Resources Minister Arcandra Tahar.
However, instead of discussing the matter with the private sector, government officials left the forum early, declining to share their perspectives and suggestions on the bill.
The turn of events has left the oil and gas industry with more questions than answers, prompting speculation the authorities may have deliberately avoided giving any statements that could be seen as controversial with less than two months to go before the presidential and legislative elections are held.
When asked to comment on the bill at a press briefing after the event, Arcandra gave a seemingly exasperated response.
“Why are you asking about this? We discussed [another matter during the forum],” he said before continuing his statement about the need to increase oil and gas production.
As reported previously by The Jakarta Post, related ministries are still in the process of harmonizing a draft of the bill, while lawmakers in the House of Representatives are waiting for the government to submit its problem inventory list (DIM).
The ministries are expected to submit their suggestions for the bill to the cabinet secretary, who will pass them on to President Joko “Jokowi” Widodo for approval.
After obtaining Jokowi’s approval, the ministries would report to the state secretary and submit a letter to the House of Representatives, said Hufron Asrofi, legal bureau head at the Energy and Mineral Resources Ministry.
The oil and gas bill was initiated by the House and included in the 2010 National Legislation Program (Prolegnas). Since then, deliberations have continued to be delayed. The bill is intended to revise Law No. 22/2001 on oil and gas.
Ramson Siagian, a Gerindra Party lawmaker in the House’s Commission VI that oversees the energy sector, was doubtful that the House could approve the bill before the presidential election on April 17.
“I don’t think we can finish [deliberating] the bill before the presidential election. The problem [of slow deliberation] now lies in the government,” he said, pointing to the fact that Energy and Mineral Resources Minister Ignasius Jonan was the one who needed to submit the DIM of the bill to the House so that deliberations could begin.
Meanwhile, Upstream Oil and Gas Regulatory Task Force (SKKMigas) head Dwi Soetjipto expressed hope the bill could provide a better regulatory framework for investors.
“There is still great potential in our upstream sector, so we need strong investors who will enjoy [regulatory certainty]. We don’t want the sector to be monopolized by a single company, but [it should also be managed] by other big investors,” he said.
In the aforementioned forum, industry players raised concerns about permits, taxation and land procurement.
For instance, Antonius Sanyojaya, a tax consultant at global consulting firm PwC, said that there were several ambiguous articles in the bill regarding taxation.
“We think it’d be better if the bill did not include any specific taxation terms as we are concerned it will contradict the existing tax law. It [the law] cannot be too specific,” he said after the event.
Antonius also highlighted an article in the bill that stipulated that oil and gas contracts could be renegotiated, which he said could affect the taxation terms and conditions in the agreement.
“When a contract can be renegotiated [after it is signed], this can affect taxation terms, and will create uncertainty for investors. The government has to sit down with investors once more to decide the terms and conditions again,” he said.
