Legislators to form special commission on oil production split

The Comission VII of the House of Representatives (DPR) will form a special commission to find the best formula in coping with problems often occurring in the disbursement of funds from oil and gas production to producing provinces, Suara Karya reported on Tuesday.

Max Moein, a senior member of the Comission VII which is in charge on oil, gas production, mining and investment, said the right formula should be established to ensure the transparency of the oil and gas production split between the central government and the provincial administration.

"The special commission will also try to find out why the disbursement of the oil and gas revenues to provinces was often delayed," he said following a meeting with the Consultation Forum of Oil and Gas Producing Provinces (FKDPM).

Alex Noerdin, the chairman of FKDPM, told the members of the Commission VII, that the funds received by the country's oil and gas producing provinces from oil and gas production were often smaller than it should be due to the lack of transparency in the calculation of the oil and gas production.

"Besides the lack of transparency, the disbursement of the oil and gas revenue that must be paid to producing provinces was also often delayed," he said.

According to the existing regulation, a provincial administration receives 15 percent of the revenue obtained from the production of oil in its area; the other 85 percent go the central government's coffer.

However, many oil and gas producing provinces complained that the amount of funds they received from oil and gas were far lower than it should be. The disbursement of the funds which should be made every three months were also often delayed causing them to suffer liquidity problem. (*)