Thursday, July 10, 2008
KPK Looks Into Report of Missing Oil Revenues
Source: The Jakarta Post
Andreas D. Arditya and Abdul Khalik

The Corruption Eradication Commission (KPK) is examining reports over the alleged misappropriation of oil and gas revenues that may have cost the state some Rp 200 trillion (US$22 billion) in losses.

The anti-graft body summoned top officials of the upstream oil and gas regulator BP Migas on Wednesday to clarify cases of embezzlement reported by both the Supreme Audit Body (BPK) and Indonesia Corruption Watch (ICW).

After the meeting, KPK deputy chairman for prevention Haryono Umar questioned the validity and transparency of the regulator's oil and gas production report.

"BP Migas has relied only on production reports made by contractors or companies. This has to stop and the agency needs to have a check-and-recheck report mechanism," he said.

Haryono said his office would continue the investigation by summoning top officials of the Energy and Mineral Resources Ministry and state-owned oil and gas company Pertamina in the coming weeks.

A BPK audit of government income statements for the 2005-2007 period revealed some Rp 120 trillion in oil revenues went unreported and was spent outside the state budget mechanism.

The BPK also found in its audit for the 2006-2007 period that BP Migas did not pay some Rp 40 trillion in recovery costs to the company's partners.

ICW in its report to the KPK alleged the misappropriation of over Rp 194 trillion at BP Migas from 2000 to 2007.

ICW said the indications of graft could be seen in the fact that the reported oil production level was below the real production level, with the annual average discrepancy reaching over 16 million barrels.

Another source of embezzlement, ICW said, came from the violations of revenue sharing principles, which deviated from the 85:15 ratio (85 percent for government and 15 percent for contractors) to 67:33.

"There are several other dishonest practices that can lead to state loses," added Firdaus Ilyas of ICW.

Haryono said the KPK was planning to form a joint team with BP Migas to analyze and improve the agency's assets management system.

There are 174 companies working on tens of thousands of oil and gas sites across Indonesia. Up to 40 of them are currently producing while the rest are still in the exploration phase. Each has to deliver and report its production at 115 onshore and offshore delivery points.

BP Migas head Priyono said his company was doing its best and would make improvements in the future.

"We're planning to make an online report system for every delivery point so we can have more accurate reports," he said.