DPR proposes establishment of production sharing contract regulating agency

The House of Representatives (DPR) has proposed the establishment of a special agency under the supervision of the government in charge of regulating production-sharing contracts, the Astaga.com reported on Friday.

Pramono Anung, a member of the Commission VII of the Indonesian Democratic Party of Struggle, said on Friday that the agency, which is aimed mainly at enabling state-owned oil and gas company Pertamina to work more efficiently, has to be handled by professionals having tens of years of experiences on production sharing contract matters.

"If this is conducted, liberalization proposed in the mining bill will not happen, namely the government will still hold control in the mining business," Pramono said.

He said for Pertamina, which is now in charge of licensing production-sharing contracts with a fee of 20 percent per barrel, there is no problem with the establishment of such a regulating agency. The problem now is the marketing and distribution, which have so far been burdened to Pertamina on its capacity as a public service company.

Pramono said that there should have been distribution costs for Pertamina, which have to be paid in line with the market price by the Minister of Finance. With the revocation of its authority to license production sharing contracts, Pertamina will no longer receive the fee of 20 percent per barrel, as it will go directly to the government treasury. As its compensation Pertamina will get profits from the distribution, he said. (*)