TEMPO.CO, Jakarta - The more corruption cases are exposed in the oil and gas sector reveals the chaotic situation the industry is in. The corruption case involving SKK Migas (oil and gas regulatory unit) chairman, Rudi Rubiandini which has now involved others has revealed new cases, among them those involving the Bangkalan DPRD (Regional House of Representatives) Speaker, Fuad Amin Imron in the fake Letter of Credit (L/C) case of Innovare Gas at the East Bontang block in East Kalimantan.
There is irony in this. Indonesia clearly needs additional oil production because fuel consumption keeps increasing. With production likely to become stagnant, the increasing consumption has prompted Indonesia to import crude oil and fuel in fantastic volumes. As a result, the oil and gas trade always shows a deficit. In 2013, the deficit on oil and gas reached US$12.63 million (Rp152 trillion). In the past 10 months alone, the cost has soared to Rp130 trillion.
Strangely, people seeking to invest in this sector are given a hard time. The licensing process is complicated and costs huge amounts of money. Illegal levies take place across the entire chain, from regional government offices, village chiefs and even officials inside the ministry. The methods differ, like bribery to accelerate the process, to providing bonuses for special holidays which involved Rudi and the former Energy Ministry Secretary-General, Waryono Karno.
This condition makes no sense. At a time when the government needs huge additional investment, they should have facilitated the licensing process and eased the regulations. But the regional officials and ministry greedily extorted the investors. It would be no surprise if investment in the oil and gas sector stayed stagnant. A number of times, the Energy Ministry held auctions on oil fields, but there were few takers.
The government must act fast to solve this problem. The production of oil keeps declining. If no significant oil reserves are found in Indonesia, the current supply of 3.7 million barrels will be depleted by 2025. As an illustration, in 2013, Indonesia imported crude oil and fuel worth Rp540 trillion.
Of course, there are many options to solving this problem. The increased use of alternative energy can help the energy supply. With alternative energy, the fuel consumption should also be reduced. But in the short term, the Jokowi government must begin to clean up the oil and gas sector from corruptors and bribe takers. The ease of investing and dispensing of regulations can attract more investors and lead to increased production.
This cleanup effort is important because the government will still auction more oil and gas fields this year. From 2012 to 2014, many of the oil and gas fields have not been sold due to a number of reasons, mainly because of the complicated licensing process. If illegal levies and bribery can be eliminated, new investment would probably make sense, and investors would be motivated to sink their money into the country.
By working with the Financial Transactions Reporting and Analysis Center (PPATK) and the Corruption Eradication Commission (KPK), the Energy Ministry can begin by auctioning off the oil fields. The revelations of the Rudi Rubiandi, Fuad Amin and Innovare cases will lead to more oil and gas fields being auctioned. The tangled condition of this industry can be unraveled. The problem is that the government so far has had no intention to resolve it. (*)
