Research Centre for Politics and Government (PoLGoV), Department of Politics and Government Studies, Faculty of Social and Political Sciences UGM collaborating with Natural Resource Governance Institute (NRGI) held training entitled Advancing Accountable Resource Governance in Asia Pacific 2018. The training which entered its fifth year was attended by as many as 28 participants from Indonesia, Myanmar, Thailand, Philippines, Vietnam, United States of America, and United Kingdom. Those participants consisted of representatives of government, Non-Governmental Organizations, and academicians. The training which was held on Tuesday (9/11) in Tanjung Pandan was attended by Indonesian Vice Minister of Energy and Mineral Resources, Archandra Tahar.
Archandra who opened the training delivered a presentation regarding gross split policy which is believed to be able to increase Indonesian oil and gas competitiveness. According to Archandra, the gross split policy gives convenience to the investor to calculate the oil and gas project’s economy by calculating the risks and income from oil and gas production transparently. Archandra further said the implementation of this policy is expected to give assurance, convenience, as well as efficiency in order to encourage Indonesian oil and gas industry’s competitiveness.
In front of the participants, Archandra emphasized the implementation of the gross split will reduce national budget because the production cost fully becomes the contractor’s responsibility. Previously, oil and gas production used cost recovery scheme, thus the nation had to pay the operational cost spent by the contractor. All this while, cost recovery system continues to cause debate because the risk calculation basis used by oil and gas production is different depending on the field condition.
“Calculating risk factor becomes debate topic in calculating the oil and gas operational cost,” said Archandra.
Gross split scheme is believed to be able to make the calculation of the contract of oil and gas working area management more accurate and transparent. Aside from operational cost, this system also gives convenience to the government through the Special Unit for Upstream Oil and Gas Business Activities who will calculate the incentive for operators based on difficulty level in the location and the applied technology. This system is also in line with the effort to prevent corruption which is conducted by the government in oil and gas as well as other natural resources utilization sectors. Archandra believes this mechanism will make Indonesian oil and gas industry to become more competitive than before. Based on the simulation done by Ministry of Energy and Mineral Resources, the gross split will increase the return on investment from 17 percent to 26 percent.
Vice Dean of Faculty of Social and Political Sciences UGM, Dr. Poppy Winanti, during her opening speech said Belitung Island is chosen to be the training location due to its long history as a stannary. “The initiative from the community to develop non-extractive industrial sector is also interesting to be a learning material,” said Poppy.