House urges govt to renegotiate oil, gas contracts

Jakarta (Antara News) - The House of Repreentatives (DPR)`s Budget Committee has asked the government to renegotiate the terms in its cooperation contracts with oil and gas exploration contractors following the discovery of cost-recovery markups committed by the contrators, a spokesman said.

"The cost recovery markups -- detected by the State Aduit Board (BPK) -- are a corporate crime against which the government must take firm legal action.The government should also renegotiate the terms of its work contracts with the contractors involved," Suharo Manoarfa, chairman of the House`s Budget Committee`s working committee on assumptions, revenues, deficits and financing, said here Monday.

He said the government must soon issue detailed implementing and technical directives on the proper components of cost recovery and omit the phrase "etcetera" from all oil and gas production-sharing contracts.

"In its efforts to increase revenues, the government should henceforth review and improve the terms and cnditions in all oil and gas contracts," he said.

Earlier, BPK Chairman Anwar Nasution had proposed that the government renegotiate its oil and gas contracts to include more detailed terms and conditions in them.

According to Anwar, the clauses on cost recovery in existing contracts were unclear and this was why governemnt revenues from oil and gas work contracts were low.(*)
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