Regions asks 100% increase in shares from oil and gas
Friday, February 10 2012 - 02:22 AM WIB
The executive director of the consultative forum of the country?s oil and gas producing regions (FKDB) Muliana Sukardi said in Jakarta on Thursday that the increase was needed to ensure that the locals received more benefits from oil and gas production at their areas.
Oil and gas are produced under a production sharing contract (PSC) scheme with oil and gas companies. For oil production, the government receives 85 percent, and 70 percent from gas production.
Under 2004 law on the financial balance between the central and regional governments, 15.5 percent from oil revenues and 30.5 percent from gas revenues go to provincial administration. From 15.5 percent received by the regions, 3 percent is given to the provincial government, 6 percent to the producing region or city and 6 percent to other regions and cities in the province. The remaining 0.5 percent is allocated for education budget.
For the 30.5 percent share from gas, the provincial government receives 6 percent, the producing regional or city government 12 percent and other regions and cities 12 percent. The remaining 0.5 percent is same as oil which will be allocated for education.
Muliana of the consultative forum said that the increase in the revenue sharing funds from oil and gas production was needed to cope with the social and environmental impacts resulting from exploration and production activities.
Meanwhile the Deputy for Operation of BPMIGAS Rudi Rubiandini said that he supported the proposal, saying that the increase would not discourage investors because the increase would be made from the government?s shares from oil and gas production.
However, he said that in order to enable the regions to receive bigger shares, the 2004 law on the financial balance between the central and regional governments should first be revised. (*)