Energy & Mineral Resource Update » 12 Juni 2008 » Hit: 110
Regulator BP Migas not ready to play with the big boys
Sumber : www.thejakartapost.com
Wed, 06/11/2008 10:37 AM | Business
Apart from questions of its integrity, a shortage of qualified professionals and an absence of clear-cut regulations have undermined the ability of upstream oil and gas regulator BPMigas to function properly.
Tasked with managing and supervising the country's multi-billion-dollar oil and gas sector, the six-year-old BPMigas remains unprepared to supervise more-experienced energy giants with connections to top officials in superpower countries.
"We are forced to function as a business entity -- fast and aggressive in seeking opportunities -- as well as bureaucrats tasked with securing cost recovery claims to maximize state revenues," said BPMigas deputy chairman Abdul Muin.
"It's a heavy task, especially in the absence of adequate human resources, money and clear-cut regulations. Many people demand we do this and that, but our request for better facilities have never been heard," he added.
The lack of qualified professionals in BPMigas may be among the factors contributing to reckless approvals in cost recovery claims.
For the 165 contractors under its supervision, only five officials are employed to run daily checks and approvals for the plans of development (PODs) filed by contractors.
The POD includes planned expenditures, which are mostly submitted as cost recovery claims to the government.
The agency has 367 employees, far below its ideal 444.
"With such a load, there is a possibility that some unfeasible projects are passed. This will only give away potential state revenue without hefty proceeds in return," said the executive director of the Reforminer Institute, Pri Agung Rakhmanto.
In some cases, he said, the officials were fooled by the more experienced oil contractors to approve certain expenses.
"The agency often fails to counter arguments from the better-paid and more experienced oil professionals," he said.
Abdul Muin said his staff was prone to getting the wrong end of a deal with the private sector, but that audits would detect any irregularities.
The lack of experience and skill has been further exacerbated by the relatively low remuneration packages compared to the billions of dollars in potential state revenues under management.
Although a BP Migas chairman can bring home some Rp 150 million (US$16,300) a month, according to Abdul Muin, his officials were only paid on average 25 percent of the highest salary in the industry.
"Fresh (college) graduates, for example, receive around Rp 3 million (US$326) per month, while their peers in oil contractors can receive a minimum of Rp 5 or Rp 7 million."
"We have never taken this issue seriously until recently when scores of our officials were hijacked by the oil contractors. We have even threatened the contractors not to recruit more of our officials, to prevent more outflows," said Abdul Muin.
Energy analyst Kurtubi of the Center for Petroleum and Energy Economics Studies, said higher salaries would not guarantee a boost in capacity and integrity unless the agency was properly supervised by an independent team.
"It's naive to think officials there are not lured to profit from the weak system. Overseeing huge funds without strict supervision from a team of ministers will just provide leeway for abuses," he said.
The Supreme Audit Agency (BPK) said the lack of resources in the supervision of cost recovery would provide incentives for the officials to collude with oil contractors by approving higher claims and unfeasible projects.
"These folks are definitely overloaded. The effectiveness of the supervision is at risk. The chances for recalcitrant companies to sneak in inappropriate costs are big," said head of BPK auditing for BPMigas, Wasito.
Intricate and sometimes murky regulations inherited by previous policy makers at the ministry of energy and mineral resources exacerbate the problems as well.
"We are tied up by numerous regulations that we must comply with or else end up in jail. In some cases we have to approve certain claims deemed inefficient because the contracts say so," said Abdul Muin.
While the ministry has the authority to arrange, negotiate and approve a contract of oil and gas operations, BPMigas is tasked merely with overseeing contract implementation.
"We are basically inheriting regulations and contracts which are not favorable. Now we are burdened with the wrongdoings of past legal products," said Abdul Muin.
He said the overwhelmingly unclear regulations accounted for the bureaucracy of BP Migas, yielding protests from oil and gas companies that invest millions of dollars in Indonesia.
The companies have regularly criticized the working culture of BP Migas as too "aristocratic", resembling that of the Energy and Mineral Resources Ministry.
Although the agency is directly responsible to the president, in practice it tends to be just a division of the ministry.
The newly elected BP Migas chairman Raden Priyono, for example, is only a former director of upstream oil and gas at the ministry's directorate general of oil and gas.
-- JP/Rendi Akhmad Witular, with additional reporting from Ika Krismantari.
Wed, 06/11/2008 10:37 AM | Business
Apart from questions of its integrity, a shortage of qualified professionals and an absence of clear-cut regulations have undermined the ability of upstream oil and gas regulator BPMigas to function properly.
Tasked with managing and supervising the country's multi-billion-dollar oil and gas sector, the six-year-old BPMigas remains unprepared to supervise more-experienced energy giants with connections to top officials in superpower countries.
"We are forced to function as a business entity -- fast and aggressive in seeking opportunities -- as well as bureaucrats tasked with securing cost recovery claims to maximize state revenues," said BPMigas deputy chairman Abdul Muin.
"It's a heavy task, especially in the absence of adequate human resources, money and clear-cut regulations. Many people demand we do this and that, but our request for better facilities have never been heard," he added.
The lack of qualified professionals in BPMigas may be among the factors contributing to reckless approvals in cost recovery claims.
For the 165 contractors under its supervision, only five officials are employed to run daily checks and approvals for the plans of development (PODs) filed by contractors.
The POD includes planned expenditures, which are mostly submitted as cost recovery claims to the government.
The agency has 367 employees, far below its ideal 444.
"With such a load, there is a possibility that some unfeasible projects are passed. This will only give away potential state revenue without hefty proceeds in return," said the executive director of the Reforminer Institute, Pri Agung Rakhmanto.
In some cases, he said, the officials were fooled by the more experienced oil contractors to approve certain expenses.
"The agency often fails to counter arguments from the better-paid and more experienced oil professionals," he said.
Abdul Muin said his staff was prone to getting the wrong end of a deal with the private sector, but that audits would detect any irregularities.
The lack of experience and skill has been further exacerbated by the relatively low remuneration packages compared to the billions of dollars in potential state revenues under management.
Although a BP Migas chairman can bring home some Rp 150 million (US$16,300) a month, according to Abdul Muin, his officials were only paid on average 25 percent of the highest salary in the industry.
"Fresh (college) graduates, for example, receive around Rp 3 million (US$326) per month, while their peers in oil contractors can receive a minimum of Rp 5 or Rp 7 million."
"We have never taken this issue seriously until recently when scores of our officials were hijacked by the oil contractors. We have even threatened the contractors not to recruit more of our officials, to prevent more outflows," said Abdul Muin.
Energy analyst Kurtubi of the Center for Petroleum and Energy Economics Studies, said higher salaries would not guarantee a boost in capacity and integrity unless the agency was properly supervised by an independent team.
"It's naive to think officials there are not lured to profit from the weak system. Overseeing huge funds without strict supervision from a team of ministers will just provide leeway for abuses," he said.
The Supreme Audit Agency (BPK) said the lack of resources in the supervision of cost recovery would provide incentives for the officials to collude with oil contractors by approving higher claims and unfeasible projects.
"These folks are definitely overloaded. The effectiveness of the supervision is at risk. The chances for recalcitrant companies to sneak in inappropriate costs are big," said head of BPK auditing for BPMigas, Wasito.
Intricate and sometimes murky regulations inherited by previous policy makers at the ministry of energy and mineral resources exacerbate the problems as well.
"We are tied up by numerous regulations that we must comply with or else end up in jail. In some cases we have to approve certain claims deemed inefficient because the contracts say so," said Abdul Muin.
While the ministry has the authority to arrange, negotiate and approve a contract of oil and gas operations, BPMigas is tasked merely with overseeing contract implementation.
"We are basically inheriting regulations and contracts which are not favorable. Now we are burdened with the wrongdoings of past legal products," said Abdul Muin.
He said the overwhelmingly unclear regulations accounted for the bureaucracy of BP Migas, yielding protests from oil and gas companies that invest millions of dollars in Indonesia.
The companies have regularly criticized the working culture of BP Migas as too "aristocratic", resembling that of the Energy and Mineral Resources Ministry.
Although the agency is directly responsible to the president, in practice it tends to be just a division of the ministry.
The newly elected BP Migas chairman Raden Priyono, for example, is only a former director of upstream oil and gas at the ministry's directorate general of oil and gas.
-- JP/Rendi Akhmad Witular, with additional reporting from Ika Krismantari.
