SKK Migas proposes special agency to manage Masela funds

By Febry Silaban

Upstream authority SKK Migas has proposed the formation of a special agency tasked with managing production share revenue from the Masela block in Maluku province payable to the province.

Under the autonomy law, oil and gas producing regions are entitled to a portion of the government?s production share revenue from oil and gas. Under the current system, the funds are channeled by the central government to the provincial government through state budget mechanism. SKK Migas proposes the funds be delivered to a special agency rather than the provincial administration.

?We propose the establishment of Agency for Regional Development Acceleration, similar to the Agency for Aceh Rehabilitation and Reconstruction. The agency will utilize the funds for the development of southern Maluku. We thus not only talk whether the LNG plant should be built onshore or offshore. The most important thing is, How to generate maximum benefits for the government and the region,? SKK Migas? Chairman Amien Sunaryadi said on Wednesday.

The Agency for Aceh Rehabilitation and Reconstruction was established following the tsunami that hit Aceh in 2005.

Amien said the establishment of Agency for Regional Development Acceleration was also proposed by Head of the National Development Planning Board (Bappenas) Sofyan Djalil during the recent limited Cabinet meeting presided over President Joko Widodo.

In his proposal, Sofyan said the agency would not only function as the recipient of the production sharing revenue but also as the distributor of the funds for the development of the economy of areas near the Masela block. The measure is aimed to ensure that people living around the block will get benefits from the block and minimize potential misuse of the funds.

Amien also said the option of offshore LNG for Masela block has gained bigger supports from ministers.

?In the first limited Cabinet meeting, seven ministers favored onshore LNG plant option. After listening to our explanation, several ministers now support the offshore option, including the minister of finance,, Bappenas head, minister of industry. Minister of Environment has even issued the Amdal certificate for an offshore LNG plant last year,? he said.

Amien explained that Masela block will potentially generate US$51 billion for the government on offshore scheme, and only $39 billion on onshore scheme.

"The margin can be used for the development of Maluku. If annualized, the region will receive Rp 5 trillion per year over a period of 24 years. At present, the province?s annual budget amounts to Rp 3.2 trillion. It will thus get an additional Rp 5 trillion,? he said.

Editing by Johannes Simbolon