Riau students force official to sign oil deal
Saturday, April 22 2000 - 05:30 AM WIB
Protesting students have finally managed to force Secretary General at the Ministry of Mines and Energy to sign a prepared statement supporting the involvement of Riau province in the management and operation of the Coastal Plains Pekanbaru (CPP) oil block in the province, Riau Pos reported on Saturday.
The signing of the statement took place on Thursday afternoon after Secretary General Djoko Darmono invited the students grouped in the association of Riau students (Hipemari) to discuss their demand.
Djoko initially refused to sign the statement because one of the points in the statement demanded the central government to transfer the whole ownership of the oil block to the provincial administration.
"It is the state's problem. If the management of the oil block is handled solely by the provincial government, it could only result in financial losses instead of profit because Riau has not been yet prepared to do the job," Djoko argued. The students later agreed to drop the point after long argument.
Djoko said that his office backed all ideas on the need to involve the local authority in the management of the oil block, which is at present still managed by PT Caltex Pacific Indonesia (CPI).
Under the existing regulation, the sole rights to operate oil and gas resources are still held by Pertamina as the representative of the government. This law has become a major barrier of the local authority to control their own oil and gas fields despite the government's plan to implement the law on autonomy and law on the inter-government fiscal balance, which give the local authority more power to administer their areas politically and financially.
Most of the oil fields are currently operated by foreign mining companies under a production sharing contract. But in the case of CPP oil block, the government has asked Pertamina and Caltex to jointly manage the oil block.
Pertamina recently said it has agreed to have only 55 percent stake in a joint venture as long as long as its partner Caltex Pacific Indonesia agreed to carry out a long-term transfer of technology program.
Both companies initially insisted for majority ownership in the oil company. (*)