Central government to retain control over oil and gas

The central government will transfer most of its mining authorities to the provinces and regencies, but retain control over the oil, gas and power industries, according to the final draft governmental regulation.

The draft regulation on the authority of the central government and provinces, whose copy was made available to Petromindo.Com, says the central government will retain the rights to issue core business licenses for the oil, gas and power industries.

But, the provincial administrations will hold the rights to issue licenses for the mining industry for cross-regency/mayoralty exploration and exploitation activities.

The draft regulation does not specify the rights of regencies and mayoralties in the mines and energy sector.

But it says in line with the Autonomy Law No. 22/1999 the regencies and royalties will take over the government's authorities except for those set in the governmental regulation.

Andy A Mallarangeng, an assistant to the state minister of autonomy law, earlier said the draft regulation was set to be signed by President Abdurrahaman Wahid this week, while the full implementation of the regulation was not expected until next year.

The draft regulation also states the autonomous regional administrations (regency, mayoralty, province) have to honor all the international agreement and commitment made by the government.

The agreements and co-operations to be established by the autonomous regions with foreign parties should not be in conflict with the existing agreements made by the government.

The final draft regulation specifies the division of authority between the central government and provinces in 23 fields.

With regards the oil, mining and energy industries, the draft regulation divides the authority of the central government and the provinces as follows:

A. Central Government

1. Establish policies on energy intensification, diversification, conservation and price.

2. Establish policies on national and regional power and natural gas transmission network.

3. Establish standards for the supervision and examination of geological natural disaster.

4. Establish standards for general survey and the development of mineral and energy resources.

5. Establish criteria for the working areas of power distribution and mining.

6. Establish the provision and the basic prices of power, oil fuel, gas fuel and natural gas in the country.

7. Regulate basic geological survey on the 1:250,000 scale, make the thematic map and inventory of mineral and energy resources and geological disaster mitigation.

8. Regulate power generation, transmission and distribution on the national grid; the use of nuclear power and radioactive mining resources.

9. Grant core business licenses for oil and gas projects from exploration to transmission of oil and

gas through cross-provincial pipelines.

10.Grant core business licenses on electricity projects, which includes cross-provincial power generation, distribution and transmission.

11.Grant non-core business licenses for cross-provincial oil and gas depot and transmission pipelines.

B: Provinces

1. Provide supports for the development and use of mineral, energy resources and underground water.

2. Grant core-business licensees for cross-regency/mayoralty general mining, including

exploration and exploitation.

3. Grant core-business licenses for cross-regency/mayoralty power distribution, which is

not connected to national grid.

4. Manage mineral and non-oil and gas energy resources, except for radioactive resources, within

four to 12 miles off the coast.

5. Conduct special training and survey in the provincial area.

(*)