IPA Meeting with Head of Expertise Body of DPR RI

On 16th June 2021, the IPA was invited for a virtual meeting with Head of Expertise Body of DPR RI, Bapak Inosentius Samsul, and his staff to present the IPA Inputs on Academic Script Concept and Draft Law towards the Changes of the Law No. 22 Year 2021 about Oil and Gas.

The IPA was represented by Ibu Marjolijn Wajong (IPA Executive Director) accompanied by relevant IPA committees (Pak Ali Nasir, Pak Hendra Halim, Pak Deny Rijadi, Pak Prana Raditya, Pak Arifin Ahmad, Ibu Rina Rudd and Ibu Zahra).

Principal Thought / Pokok Pikiran IPA

  • Upstream Oil and Gas Investors need a competitive investment climate to be able to attract capital to Indonesia.
  • A competitive investment climate will trigger exploration activities that will increase Indonesia’s oil and gas production, which can generate a multiplier effect that will stimulate economic growth.
  • The replacement agency of SKK Migas (BUK) must be a strong body and in accordance with the constitution as well as has the authority to coordinate with all ministries/agencies, as well as local governments.

IPA Input on the New Oil and Gas Law / Masukan IPA terhadap UU Migas Baru

  • Assume & Discharge Principle – Investors need fiscal certainty in the implementation of PSCs. This can be achieved by applying the principle of Assume & Discharge to ensure that during the term of the contract, the contractor and government share remains the same.
  • Market Access – The needs to be flexibility for KKKS to be able to market their share (share of contractor’s share) including for export. In the event that domestic supply is required, it must be based on the agreed price.
  • Gas Price Approval – The determination of gas prices is carried out with the principle of Business to Business and is approved by the Government. The gas prices should not reduce the economy of the contractor thus it is required for the Government to look a better process on subsidising the gas prices.
  • Contract Certainty – Contract certainty is needed by investors in the process of making investment decisions in a country. In the event that the investment has been made by the Contractor, the Government must comply with the Cooperation Contract that has been signed between the Government and the Contractor, so that the stability of the economic level of a project can be maintained.
  • Avoiding Potential Civil Criminalization – It is necessary to regulate the legal relationship between BUK and KKKS is a civil relationship and is based on agreement of the parties.
  • Comprehensive Transition Terms – It is important to respect all terms of existing contracts/agreements; for this reason, a comprehensive transitional provision is needed, such as the transitional provisions regulated in Law No. 22 Year 2001.

 

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