Indonesia freezes oil, gas and mining contracts

Published November 1st, 2000 - 02:00 GMT

All decisions on contracts for oil and gas extraction and mining in Indonesia will be put on hold next week until the country’s regions are officially given autonomy on January 1, Mining Minister Purnomo Yusgiantoro said yesterday. 

 

“There is a rule that when the government regulation (was) issued ... it said that six months thereafter, which means November 6, the central government should not issue strategic decisions,” Yusgiantoro said. 

 

“I will not take any strategic decision until the regional autonomy is transferred to the regional offices on January 1, 2001.” The Minister also said foreign and local mining companies would be invited to help regional governments ready themselves to take over administering contracts. He did not name the regions he considered ill-prepared. 

 

Existing mining contracts would remain in effect, he said, but he did not rule out demands for changes in some regions. “The contract is law between two parties, we must respect it, we must keep consistent to hold the contract until the end of the contract ... unless the Bupati wants to change ... and that’s a different story,” he said, without elaborating .A Bupati is a regional administrator. 

 

Under new regional autonomy laws, the power to award contracts to oil and mining companies will be devolved from the central government to Indonesia’s provinces, regencies and mayoralties. 

 

The ministry’s director general, Surna Tjahja, has proposed delaying the devolution of authority over foreign mining decisions by at least five years, but Yusgiantoro made no mention of the proposal. 

 

Tjahja told the Jakarta Post at the weekend most local administrations lacked skilled personnel to negotiate such contracts. The foreign mining industry is also nervous at the prospect of inexperienced local administrators being empowered to award contracts. 

 

Indonesia is rich in oil and gas, coal, gold, copper and other minerals and is the world’s leading exporter of liquefied natural gas, most of which is shipped on 20-year contracts. – AFP. 

©--Agence France Presse.  

 

 

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