Considerations for Indonesia's New Government

As a new government assumes power, Indonesia faces a historic opportunity to enhance the country’s management of its oil and mining industries; these enhancements could include more sustainable economic outcomes to benefit all Indonesians, reduction of risks of corruption, and an increase public trust. This series of briefings offers key considerations for the government as it forms its agenda for management of natural resources and begins to tackle the country’s pressing challenges.

Summaries of the briefings:

Transparency and Accountability in the Oil and Mining Industries

This briefing focuses on steps that the government can take to bolster existing efforts to promote transparency and greater government-citizen dialogue around natural resources. It includes a discussion of:

• Mechanisms to increase the transparency of licensing processes, especially in the mining sector
• The benefits that Indonesians could gain from public disclosure of petroleum and mining contracts
• The elements of the new, stricter EITI Standard that Indonesia will have to implement beginning in 2015, and the benefits that rigorous implementation can confer on Indonesia
• The importance of closer communication and coordination between national and subnational governments around extractive-sector management.

Structuring Petroleum-Sector Institutions

Indonesia is revising its oil and gas legislation, which necessitates a thoughtful approach to restructuring petroleum-sector institutions, particularly in the wake of a 2012 Constitutional Court decision which invalidated the role played by regulatory agency BP Migas. A new system that ensures rigorous and consistent enforcement of the rules and includes strong performance incentives for Pertamina and other public agencies will be essential. To this end, our second brief builds on Gadjah Mada University’s expertise on oil-sector institutions in Indonesia and NRGI’s global research on oil-sector administrative structure and national oil company management, to share:

• Pros and cons of various institutional models under consideration by Indonesian officials
• An assessment of the implications of different possible rules for enabling Pertamina to participate in (and lead) the operating groups that manage oil projects
• Lessons learned from international experience around various accountability mechanisms—including audits, advisory committees and rigorous reporting requirements—and the performance of national oil companies and regulatory bodies