House completes revision of oil and gas law, proposes special entity
Wednesday, May 17 2017 - 02:03 AM WIB
The House of Representatives Commission VII on energy and mining has completed the revision of the 2001 Oil and Gas Law, under which a special business entity to oversee and manage the country?s oil and gas sector has been proposed.
Head of the Commission VII, Gus Irawan Pasaribu said that the revised bill has been submitted to the House Legislation Body for ?synchronization.?
Commission member Dito Ganinduto expects the bill to be quickly approved into law once deliberation process with the government has been completed.
Stakeholders in the country?s oil and gas sector has been waiting for quite long for the government and the House to complete the revision of the oil and gas law, a process which started in 2008. The lengthy delay in the completion of the amendment of the oil and gas law has added to uncertainties in the sector.
Commission VII member Harry Purnomo said that one of the important points in the revised oil and gas law is the setting up of a new institution to oversee and manage the country?s upstream and downstream oil and gas sectors.
He explained that state-owned oil and gas firm PT Pertamina, state-controlled gas distribution firm PT PGN Tbk, upstream oil and gas authority SKK Migas, and downstream oil and gas authority BPH Migas will be put under a special business entity. ?Pertamina, PGN, SKK Migas, and BPH Migas will be put under one roof of special business entity. It will be like a holding company,? he said.
Harry explained that each companies and institutions will continue to run their respective roles, but they will be under one command of the special business entity. ?The goal is to create one step toward energy independence and resilience, efficiency, reliable, and sustainable,? he said.
He added that the shareholders of the proposed special business entity will include the Ministry of Energy and Mineral Resources, Ministry of Finance, and the Office of the State Minister of State Owned Enterprises.
He said that the creation of the special business entity is in line with the ruling of the Supreme Court which stipulates that the upstream and downstream oil and gas sector must be controlled by the state.
He added that by putting Pertamina and PGN under one roof, it would help improve efficiency. He said that as the two companies currently are running independently, there are inefficiencies such as in the distribution of gas for consumers which lead to high price.
Editing by Reiner Simanjuntak