Government Authority in the Administration of Oil and Gas which is a Concurrent Government Affairs

Indonesian Positive Law-

The era of regional autonomy has an impact on the problem of the division of authority in government affairs between the central government, provincial regional governments, and district/city regional governments, one of which is in terms of energy and mineral resources. Observing this, the government has regulated it through Law Number 23 of 2014 concerning Regional Government.

The selection of the title above pays attention to the phenomena that occur in the regions in the implementation of oil and gas sub-affairs, especially regarding oil and gas trading in Indonesia.

For this reason, the author conveys his views through this paper which is presented with normative juridical methods.

In this description it is presented about:

Introduction

The government’s authority in the administration of oil and gas which is one of the concurrent government affairs in the field of energy and mineral resources is regulated in Law Number 23 of 2014 concerning Regional Government.

In this description first presented some general information for common understanding in matters related to the title.

What is oil and gas administration?

The implementation of oil and gas is a series of oil and gas business activities consisting of upstream business activities and downstream business activities.

Upstream business activities consist of exploration and exploitation, while downstream business activities consist of processing, transportation, storage, and commerce.

Who are the operators of oil and gas in Indonesia?

The operator of oil and gas is Pertamina appointed by the Ministry of State-Owned Enterprises in terms of oil and gas administration in Indonesia.

Problems

Does the local government have the authority to administer oil and gas in Indonesia?

Discussion

To discuss the problems mentioned above, the author conveys several points of thought, including the brief history of Pertamina, concurrent government affairs, and the relationship between local governments and Pertamina.

Brief History of Pertamina

Pertamina began to be formed around the 1950s as a company engaged in oil and gas in Indonesia, which then in 1960 had the status of a state company, and finally based on Law Number 22 of 2001 concerning Oil and Gas was appointed as the organizer of Public Service Obligation (PSO) carried out through business activities.

Pertamina was designated as a holding company on June 12, 2020 by the Ministry of State-Owned Enterprises in the energy and mineral resources sector.

Currently, Pertamina oversees five subholdings engaged in the energy sector, namely:

Upstream Sub-holding which is operationally run by PT. Pertamina Upstream Energy.
Gas Sub-Holding run by PT. State Gas Company.
Refinery &; Petrochemical Sub-holding run by PT. Pertamina International Refinery.
Power & NRE Sub-holding run by PT. Pertamina Power Indonesia, and Commercial &; Trading Sub-holding run by PT. Patra Commerce.
Shipping Company run by PT. Pertamina International Shipping.

Concurrent Government Affairs

Government affairs as we all know them consist of absolute government affairs and concurrent government affairs.

Absolute government affairs are affairs that are entirely the affairs of the central government, while concurrent government affairs are affairs that are divided between the central government, provincial regional governments, and district/city local governments.

Furthermore, concurrent government affairs are divided into compulsory government affairs and elective government affairs.

Also read: Concurrent Government Affairs

In the annex to Law Number 23 of 2014 concerning Regional Government, it has been regulated regarding the areas of concurrent government affairs that are the authority between the central government, provincial regional governments, and district/city regional governments.

Energy and Mineral Resources is one of the fields in concurrent government affairs that is elective, consisting of several sub-affairs, namely: geology, minerals and coal, oil and gas, new renewable energy, and electricity,

Pertamina’s Relationship with Local Governments in Oil and Gas Business Activities

Oil and gas business activities are divided into upstream business activities consisting of exploration and exploitation, and downstream business activities consisting of processing, transportation, storage, and commerce.

Pertamina as an oil and gas operator appointed by the central government, in this case the Ministry of State-Owned Enterprises is a holding company that oversees several companies engaged in upstream business activities and downstream business activities in oil and gas business activities.

As a company, Pertamina is certainly oriented to the company’s vision and mission to achieve the goals as stated in the company’s articles of association and bylaws in order to benefit through formulated business strategies.

In the Annex to Law Number 23 of 2014 concerning Regional Government, precisely in Number I letter CC, it is stated that concurrent government affairs in the field of energy and mineral resources with oil and gas sub-affairs are fully under the authority of the central government.

Based on the division of authority in concurrent government affairs as stipulated in Law Number 23 of 2014 concerning Regional Government, the relationship between Pertamina and local governments regarding the authority of concurrent government affairs in the field of energy and mineral resources, especially oil and gas sub-affairs, is entirely the authority of the central government.

Thus, local governments cannot participate in the business strategy that has been formulated by Pertamina in order to realize its vision and mission because it is the authority of the central government through the Ministry of State-Owned Enterprises.

Conclusion

Based on the description above, the author concludes that local governments as stipulated in Law Number 23 of 2014 concerning Regional Government do not have authority in concurrent government affairs in the field of energy and mineral resources with regard to oil and gas sub-affairs.

Likewise, with the division of authority over other concurrent government affairs between the central government, provincial regional governments, and district/city regional governments, there are no provisions for laws and regulations governing the implementation of oil and gas into the authority of local governments.

The authority of the central government in concurrent government affairs in the field of energy and mineral resources with oil and gas sub-affairs is exercised by the Ministry of State-Owned Enterprises by appointing Pertamina as the organizer in the implementation of oil and gas. -RenTo270623-