1 transparency mechanism (english)

LOCAL INNOVATION : OIL/GAS TRANSPARENCY MECHANISMBLORA DISTRICT

LOCAL INNOVATION : OIL/GAS TRANSPARENCY

MECHANISMBLORA DISTRICT

Jakarta, May 23rd 2012

Basic Problem

Revenue Sharing Mechanism: A mere socialization Local Govt. do not have the necessary data for calculating

revenue Production data (update real time production) cost recovery per oil/gas block Oil/gas deposits/reserveField development data (Example: PoD and WP&B)

Corporate Social Responsibility Lack of coordination in CSR-CD implementation (local govt.

only receive reports after the implementation is done) Environmental Impact

Lack of socialization & simulation over environmental impact treatment

Objectives of Transparency Mechanism

To make transparent of information on revenue, CSR-Comdev and information on mitigation and environmental impact of oil/gas mining

To build dialog and constructive multi-stakeholders mediation

Provide input on data and information for local development planning and budgeting

Stages of Process

Study Study on local problems related to revenue, CSR and environment Study on rules and regulations Research on oil/gas revenue flow and transparency aliran penerimaan dan

transparansi Migas Model Development

Multi-stakeholders discussion: formulating model/transparency mechanism Agreed upon formulated model Legal Drafting in local level

Advocacy and campaign Local regulations advocacy Seminar, workshop, media campaign, and sharing lesson learn

Implementation and Institusionalization Formation of Transparency Team (Regulation from Head of Municipal/Bupati) Budget advocacy for Transparency Team Working meeting of Transparency Team Socialization and Publication Facilitating over local issues (PPGJ, Old Well, CSR, etc) Advocacy to Central Government

Transparency Mechanism Model

Implementing Institution Oil/Gas Transparency Team- Multi-stakeholders (Local Govt,

Company, Civil Society) Legal Based

Head of Municipal Regulation (Peraturan Bupati) No. 65/2010

Type of information to be made transparent : Revenue Information Social/Environment Information CSR Information

Funding Local Bugdet (APBD) and other legal funding

Working mechanism: Sosialization and Information publication; Multi-stakeholders Dialog; Policy Advocacy to central govt.; conduct studies /or forming working group

Membership and Funding

Member of Oil/Gas Transparency Team in Blora district consist of 20 person from various stakeholders

Selected stakeholder mostly invovled in the process since the very beginning

Involved Stakeholder: Executive (Assistant II, Local Development Planning

Body/Bappeda, Environment Office/Dinas LH, Energy and Resource Office/Dinas ESDM, Law Section, Economy Section)

Legislative (Commission B DPRD) NGO Media Mining Society Group Association of Mining Workers Local Companies

Team Main Duty (As mandated in Bupati regulation)Article 5: Duties and FunctionI. Formulate working agenda and

implement extractive industry transparency mechanism

II. Conduct strategic studies and formulate policy recommendation to related stakeholders

III. Conduct assessment, socialization and publication to the society, working result , and data of extractive industry

Work Plan

Work Meeting conduct every once a year to formulate Work Plan for the next one year

Sample of work plan from Transparency Team in Blora (2012):1. Build Revenue Working Group and CSR-Environment

working group--> to focus team’s work2. Revenue Working Group: to continue Blora’s revenue

sharing/DBH advocacy (Blora do not receive DBH from Cepu block since DBH sharing based on the location of the mouth the well located in BojonegoroCSR & Environment working group: to support trasnparency and the improvement of environment management and CSR by companies

3. To agreed upon tranparency mechanism that has not been regulate yet under the Bupati regulation

Transparency’s Working Mechanism

Transparency Mechanism: Data collection:

Every related institution and companies provide data to transparency team every quarter

Create medium for socialization: leaflet and media release

To be published per quarter Content of publication materials: Activity report and

Tranparency Team Achievements, Data Lifting, Realization of oil/gas revenue sharing/DBH, Realization of PI revenue sharing, oil/gas tax, Data on old well management, Data on CSR by oil/gas companies

Transparancy Mechanism

Companies Central Govt.

Transparency Team

Public/Society

Related Local Govt. Unit

-Collecting Data-Analyzing Data-Formulating information

Achievements of Transparency Team|2011-2012

2012: Publication of Information: Data on DBH,

Old Well, team’s working result, budgeting, in the form of leaflet and media release

Workforce mediation: Mediation between citizens, companies and

local govt. due to citizens complaint over Pertamina project PPGJ in Sumber village, Kradenan

Advocacy on Cepu block oil/gas DBH to central government (wich was still consider unfair by Blora)

1. Policy advocacy for oil/gas DBH in Cepu Block

Considering option to initiate Letter of Joint Agreement/SKB from 3 ministries to give DBH to Blora; has been discussed with the three ministries (ESDM, Keuangan dan Dalam Negeri)

2. Actively involved in Judicial Review of UU 33 2004

about Financial Balance (becomes expert witness)

3. Mediator between citizen and companies Facilitating agreement to resolve problem

as stated in Berita Acara/BA. BA will serve as reference document for parties during the resolving process

Achievements of Transparency Team|2011-2012

Lesson Learn

Building trust Trust between stakeholders – main key Need approaches and process in order for society, companies,

and local government to sit together and to agreed upon a joint initiative.

Transparency and ‘beyond transparency’ Transparancy trigger the improvement of performance of the

mining companies—certain intervention from the local govt. and the society with specific institution and organized work

Transparency itself isn’t enough, start to conduct mediation Innovation and Institutionalization

Building model phase- the role of champion (from each parties) is vital

Next important stage– institutionalization within the system (perbub/Bupati regulation, detail implementation rules, local budget for funding, mechanism for monitoring performance, etc)

Challenges Time needed to encourage the government to be transparent in

revenue sharing/DBH In the reconcilitaion of DBH today, there is aggregate information on cost recovery

The involvement of contractor (KKKS) in the Transparency Team is not formal yet Internal bureaucracy issues and interpretation of law product KKKS was an active obervant

Change of actors- the position within companies and government often change, resulting in certain process during the changing of team member

Policy improvement needed: Encouraging transparency mechanism to have stronger legal based (perda) Encouraging the revision of oil/gas regulation so the local govt. can have maximum

involvement in managing oil/gas

The need to replicate the mechanism to other resource-rich region

Terima KasihThank You