Establish Transparency Mechanisms In Extractive Industries (2)

During the activities of extractive industries in Bojonegoro exploited since the 1800s, same problems come popping up. If categorized, at least the problems arise are : local revenue form oil and gas, environment- social, and corporate social responsibility (CSR).

Until now, local government still has no resolution mechanism that became standard. As a result, people often collide with the company and local government.  These problems that arise betweens are:

1. DBH (local revenue) Distribution for Bojonegoro by the Central Government is still closed.
In the division of DBH, local governments feel the central government is closed, not open in the process. The most crucial issue in the distribution of DBH is ‘no exclusion of local government in lifting activities, aren’t told what kind of on cost recovery as well as the pertinent data with other DBH.

Amount in lifting, when the lifting is done, cost recovery and the amount, investment credit, First Tranche Petroleum, Domestic Market Obligation, profit gas split, Indonesian Crude Price and other data which becomes an important factor to determine the distribution of DBH.

If the data above are owned, local governments can certainly find out how much should DBH were administered. Because by having such data, local governments can do more accurate projections to determine how the revenue should be obtained. During this time, in reconciliation  data activities organized  by ministry of finance, Internal Revenue Service Asset and management  (DPPKAD) and the Section of Natural Resources area (SDA) is only presented with ‘cooked data’ related to how DBH that were administered. And this incident is still ongoing as of this writing.

Experience shows, from 2006 to 2010, local governments only have mature reports provided by the Ministry of Finance. For example, given the case of DBH in 2009 : Regulation of the Minister of Finance (PMK), which published the Minister of Finance on Estimates Allocation Fund (DBH) Oil and Gas in 2009 experience a ‘change up for three times’.

First PMK No. 17/PMK.07/2009, Feb 9, reached 130 M. The Secondly of PMK No. 50/PMK.07/2009 March 23, decreased to 52 M, and the third policy, PMK No. 167/PMK.07/2009 Nov 4, rose again to 82 M. Even more alarming, the Finance Ministry until the end of 2009, transferred  37, 9M to Bojonegoro Regency. That is still experiencing less 44 M.

Lacking comparable data, local government bargaining becomes weak.
Despite the changes up to three times, Bojonegoro Regency unable to check, whether the number of DBH in 2009 is correct or not, as well as DBH in previous years. Because the local government has no comparative data, not involved and did not have the data used to make projections.

Projections due to changes in DBH and counting, the Major of Bojonegoro issued letter No. 900/3393/412.39/2009. Statingthe potential default  in 2009. One precaution for default, the Major of Bojonegoro then delay some activities of regional development plans and choose the program that became super-priority activities.

Lack of coordination between local government agencies in revenues counting and projection.
As one shareholder, Bojonegoro regency hasn’nt been able to optimize all the potential that exists within the context of counting revenue from oil and gas. Not maximal in coordinating inter-government agencies. Actually, with of 4.484% share in Cepu Block, Bojonegoro regency automatically have access to the important data to make projections and computation in this sector. These important data are : the amount of lifting, DMO, taxes, CR, etc.

2.Oil and gas companies operating in Bojonegoro impact on social environmental issues still not handled well.
During the activities of oil and gas industry, at least there were seven incidents of environmental disasters caused by oil and gas industry. Again, the people surrounding the mining became victims. In this case the community should conduct its own negotiations to resolve the problem with the company. Some of the gas disaster that appears are :

The working area of JOB Petrochina East Java 
Events                            Time                  Number of victims
Blow Out/ Gas Flare    Jul, 29 2006     17 people
Blow Out/ Gas Flare    Sep, 19 2007    7 people
Blow Out/ Gas Flare    Jan, 21 2008    Hundreds people
Blow Out/ Gas Flare    Jan, 28 2010    15 People

The working area of Mobil Cepu Limited
Events                            Time                  Number of victims
Blow Out/ Gas Flare    Feb, 5 2010      50 People
Blow Out/ Gas Flare    Feb, 10 2010    8 People

The working area of Pertamina EP Region Java
Events        Time                Number of victims
Blow out     Jun, 1 2010    Land forest destruction

In the national context, we have Act UU 32 of 2009 on the protection and environmental management. In the regulation expressly set of threats for companies or individuals who commit violations against the environment.

But specifically the mechanism of Disaster Risk Reduction of the extractive industry in Bojonegoro not well ordered. Given the importance of saving society and environment, it takes DDR mechanisms stipulated in the local regulation.

DDR mechanisms governing how prevention efforts should be done by the oil and gas companies. For example, emergency response, environmental impact assessment (EIA), environmental management plan (RKL) and environmental monitoring plan (RPL). In addition the company also submit periodic progress reports levels of air and water resulting from oil and gas industry activities.

The company also must have a standard treatment if there is a disaster. It should be disseminated to the public. Saving the environment post-exploitation of oil and gas should also be on transparency by the oil and gas companies. including its budget allocations to socialize.

3. Corporate Social Responsibility and Community Development Around (CSR).
Transparency within these scope,  includes the stage of assessment, program planning and budgeting, program implementation, monitoring and evaluation, and sustainability of CSR programs.

The budget allocation of the company’s CSR activities counted fairly large. Because there is synergy with regional development plans, so that the target company’s CSR is still not optimally perceived by the public. Because of the lack of synergy with regional development plans,  the target / result of CSR is still not optimally perceived by the public.

Also needed transparency in the targeting mechanism, the determination of companies partner or consultancy. For all this, partners from the energy companies are still dominated by outsider. So the tendency is to make local actors were not involved in CSR programs.
The idea of the mechanism of CSR, through regulatory intervention is needed to prioritize areas of local communities in conducting CSR activities.

So, how are we going to solve these problems?
Transparency Mechanism as part of problem solving. Various problems that arise due to extractive industry activities actually originate in the closure and access information. Efforts to promote transparency are still having problems, especially regarding issues of protection by regulation. The existence of regional regulations (perda) is expected to be the entrance to protect local interests against the exploitation of natural resources in Bojonegoro.

And, in 2011, the Bojonegoro parliament has initiated (at the instigation of stakeholders) of a local regulation concerning : transparency of governance in the field of extractive industries. Therein set of models and mechanisms for transparency in the management of oil and gas industry which includes : local revenue from oil and gas expoitation, environment – social, and CSR management. And as part of civil society, it is our duty to oversee this regulation according to its track.

And then, local regulation is expected to become a model for other regions that are playing the same issue. [finaly/pen]

*Penulis:Joko Purwanto, Bojonegoro Institute activists.