OIL & GAS BILL: Expert says it's better to amend Oil and Gas Law No. 8/1971

In a bid to enhance the development of oil and gas industry in the country, it would be better for the government and the House of Representatives to amend existing Oil and Gas Law No. 8/1971, rather than continuing with the current deliberation of the new oil and gas bill, according to oil and gas expert Kurtubi.

As reported by Kompas on Saturday, Kurtubi said the weaknesses of Law No. 8/1971 lies only with its implementation. He added that a number of articles in the law also needed amendment.

According to Kurtubi, Law No. 8/1971 is enough to make Pertamina a more competitive entity, just like the way Malaysia had developed its state oil and gas firm Petronas into a world-class oil and gas company.

Actually, Kurtubi said, one article at Law No. 8/1971 was adopted by Petronas. The article says that all oil and gas exports revenue goes to the state oil and gas firm, which then channels some portion of the income that belong to the government to the state treasury.

That particular article remains there. However, following the issuance of Presidential Instruction in 1975, Pertamina is required to submit all income from oil and gas sales to the state treasury.

Nevertheless, Kurtubi said, some articles in Law No. 8/1971 must be amended, including the one that requires Pertamina to pay 60 percent of taxes to the government. This article must be amended so that it would treat Pertamina fairly, charging Pertamina at the same level with other oil and gas companies in the country, in terms of tax payment.

As the weaknesses of Law No. 8/1971 lie with its implementation, the government better implements Law No. 8/1971 fully. If necessary, people at Pertamina considered to be not working well should be replaced, he said. (*)