Comval BK: O&G Revenue for Sustainable Welfare in Bojonegoro
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Transcript of Comval BK: O&G Revenue for Sustainable Welfare in Bojonegoro
MAKING OIL & GAS REVENUE WORKS FOR SUSTAINABLE WELFARE IN
BOJONEGORO REGENCY
Presented at the discussion on
Natural Resources & Extractive Industry Revenues
in Province of Compostela Valley
Republic of the Philippines
August 22-24, 2013
Drs. H. SUYOTO, M.SiMajor of Bojonegoro Regency
Introduction
Thank you for the invitation, trust, and honor given to me, to share information and experience in developing Oil Transparency Mechanism in Bojonegoro, East Java Province, Indonesia.
We all are faced with the same challenges and responsibility on preserving the earth future, finding solutions on global, regional and local issues related to exploitation of our natural resources.
Background
Challenges in Oil/Gas business The whole oil and gas business and
operations are not only stewarded by the state, but also by oil companies, politicians, bureaucrats, and civil society (FROM-INCLUSIVE-TO-EXCLUSIVE PROCESS)
Transparancy will be the main key to ensure the management of environmental impacts, social conflicts, and revenue sharing is not held hostage by company, politicians, and bureaucrats (FROM-EXCLUSIVE-TO-INCLUSIVE PROCESS)
OIL AND GAS POTENTIAL IS LIKE “TWO SIDES” OF COIN
BENEFITS:• THE INCREASE IN LOCAL GOVERNMENT INCOME FROM
OIL AND GAS SECTOR WILL HAVE AN IMPORTANT EFFECT IN DEVELOPMENT OF BOJONEGORO
• HIGH EXPECTATIONS ON OIL AND GAS REVENUE TO TRANSFORM FROM POOR TO RICH DISTRICT
• A LARGE OF EMPLOYMENT OPPORTUNITIES
• ENVIRONMENTAL DAMAGE, INFRASTRUCTURE DAMAGE, HAS THE POTENTIAL TO CAUSE A DISASTER
• PEOPLE LOST THEIR LANDS FOR THE PROJECT, CONFLICT ON EMPLOYMENT OPPORTUNITIES, CAN BE VULNERABLE TO CAUSE SOCIAL CONFLICT
• CREATING NEWLY RICH GROUP BUT ALSO NEWLY VULNERABLE/POOR GROUP
MUST BE MAINTAINED BY THE GOOD PLANNING,
ACCOUNTABLE AND TRANSPARENT SYSTEM
NEED TO ADDRESS SEVERAL KEY ISSUES
1.How to minimize bad impacts of extractive industries on the ecology
2.How to use the revenues from extractive industries that could significantly strengthen the capability of the local community to improve their welfare and happiness, and sustainable development.
The current population is a little over 1.2 million --80% of whom live on agriculture
Bojonegoro covers an area around 235,000 hectares – 30% of which is farm land, while 44% is state-owned teak forest
CHALLENGES IN BOJONEGORO:
Bojonegoro’s past history had been identical with severe poverty. C Penders, an Australian historian wrote “A Story of Endemic Poverty in North-East Java”, in which he described Bojonegoro’s history of poverty. During the period of 1900 – 1920 poverty in Bojonegoro was very concerning, where about half of hospital patients died of malnutrition
Ironically, the highest number of people lives from teak forest, but mostly enggage with illegal logging, no significant wealth
The area is flood prone from the nearby Solo River during rainy season
Subject to severe drought during dry season Unstable surface land ormation, causing poor road conditions in
the regency
HOWEVER, SOME PROGRESS..
TWO IMPORTANT MILESTONES, WHICH IMPROVED THE WELFARE OF THE PEOPLE IN BOJONEGORO: THE CONSTRUCTION OF PACAL IRRIGATION DAM BY THE DUTCH COLONIAL
GOVERNMENT IN 1933 INTENSIFICATION OF RICE PLANTING AND IMPROVEMENT OF IRRIGATION
SYSTEM BY THE INDONESIAN GOVERNMENT DURING PRESIDENT SUHARTO ERA IN 1968 TO 1998
ALTHOUGH STILL BELOW THE MILLENIUM DEVELOPMENT GOALS (OR MDG’S), INDEXES IN VARIOUS SECTORS DURING THE REGIONAL AUTONOMY ERA HAVE SHOWN SOME PROMISING PROGRESSES
67.29 77.35 98.88 61.90 102.65
67.35 77.25 99.11
71.77 102.50
20112012
2008 2009 2010 2011 2012
10.24 10.44
11.84
9.19
5.68
5.82 5.936.456.60 7.40
ECONOMIC GROWTH
Economic growth in oil and gas sectors
Economic growth in non-oil and gas sectors
2008 2009 2010 2011 2012
13.7 16.8
22.2
27.6
30.0
9.1 10.2
11.5 12.8 13.5
Regional Gross Domestic Product (Trillion)
Regional Gross Domestic Product Per Capita (Million)
OIL AND GAS REVENUE: •A NEW HOPE•STRATEGIC ISSUES IN MANAGING OIL AND GAS OPERATIONS
MAJORITY IN THE HOST COMMUNITIES AROUND PROJECT AREAS ARE FARMERS / FARM WORKERS WHO LOST THEIR LANDS FOR THE PROJECT
I DID NOT USE OIL AND GAS AS A MAIN TOPIC DURING MY CAMPAIGN DURING THE GENERAL ELECTION FOR THE REGENT OFFICE, AS I STRONGLY SENSED THE HIGH EXPECTATIONS THAT OIL AND GAS WOULD BE THEIR VEHICLES FROM RAGS TO RICHES… JUST LIKE IN BRUNEI OR MIDDLE EAST COUNTRIES
The year I took the office
IMPORTANT INDICATORSOUR UNDERLYING SPIRIT
SUSTAINABLE DEVELOPMENT
PILLARS
ENVIRONMENT
ECONOMIC
STRENGTHENED INCOME FROM NON-OIL/GAS SECTORS
SOCIAL
CLEAN AND GOOD GOVERNANCE
HAPPINESS INDEX SOCIAL HAPPINESS
PERSONAL HAPPINESS
A WAY OUT OF THE MIDDLE
INCOME TRAPDEVELOPMENT OF INFRASTRUCTURE AND ENERGY, EQUITY CAPITAL, INNOVATION AND TECHNOLOGICAL DEVELOPMENT
PROVISION OF SOCIAL SECURITY
Addressed in a holistic and synergetic approach
4 KEYS TO SUCCESS
TECHNICAL ASPECT
BUSINESS ASPECT
SOCIAL ASPECT
LEGAL ASPECT
SOME EXPERIMENTS TO ENSURE OIL & GAS REVENUE
TRANSFORM INTO SUSTAINABLE DEVELOPMENT IN BOJONEGORO
Alignment of Plan of Development (of oil and gas fields) with Regency Spatial Layout Plan (Zoning) and Detailed Sub-District Zoning Plan
Operator’s commitment to manage socio-economic issues is put forward as a condition before Location and Construction permits are issued
On going program to build 1,000 water ponds for irrigation, as an effort to increase agricultural productivity to compensate the massive land conversion for oil and gas operations
PROBLEM: ENVIRONMENTAL DEGRADATION, DECLINE OF
AGRICULTURAL YIELD DUE TO MASSIVE LAND CONVERSION
PROBLEM: THE ISSUE OF SOCIAL CONFLICT IN VILLAGES AND RURAL PRODUCTION AREAS, LOCAL
UNEMPLOYMENT
LOW SKILLS &COMPETENCIESPOVERTY
DAMAGE TO INFRASTRUCTURE
UNEMPLOY-MENT
THE GOVERNMENT TOOK THE INITIATIVE TO ENACT BOJONEGORO LOCAL REGULATION NUMBER 23/2011
ON ACCELERATION OF REGIONAL ECONOMIC GROWTH IN RELATION TO OIL AND GAS EXPLORATION AND
EXPLOITATION
Local Regulation Number 23/2011 on Regional Economic Growth Acceleration in the Implementation of Oil and Gas Exploration and Exploitation
Local Regulation Number 26/2011 on Spatial Planning Bojonegoro Year 2011-2031, including the detailed plan
Strengthening strategic policy on Agriculture and Oil/Gas in the Long Term Development Plan (2005-2025) and Intermediate (2013-2018) -- currently in the final stage of completion
Local regulation number 11/2011 on Participating Capital Investment within the Regency of Bojonegoro
Local regulation number 29/2012 on the System for Regency Development Planning
SOLUTION: SUSTAINABLE & PARTICIPATORY PLANNING, BETTER INVESTMENT STRATEGY
Related to Employment Opportunities.
HIGHLIGHTS OF THE LOCAL REGULATION NUMBER 23/2011 :
PROVIDE TRAINING FOR SEMI-SKILLED /
SKILLED WORKERS
UNSKILLED JOB OPPORTUNITIES
ARE THE PRIVILEGE OF
HOST COMMUNITIES
ASSIST LOCAL BUSINESSES TO
QUALIFY FOR AVAILABLE BUSINESS
OPPORTUNITIES
Related to Business Opportunities
HIGHLIGHTS OF THE LOCAL REGULATION NUMBER 23/2011 :
GIVE PREFERRENCE AND PRIORITY FOR
LOCAL BUSINESSES
MANDATORY BUY-LOCALLY
POLICY, IF GOODS AND
SERVICES ARE AVAILABLE
ESTABLISH REPRESENTATIVE
OFFICES IN BOJONEGORO
Related to Development Zone
HIGHLIGHTS OF THE LOCAL REGULATION NUMBER 23/2011 :
MULTIPLIER EFFECT AND
TRIGGER LOCAL ECONOMIC
DEVELOPMENT
PROHIBIT SUPPORTING /
NON-TECHNICAL FACILITIES WITHIN THE
PROJECT AREA
DECREE NUMBER 27/2012 WAS
ISSUED AS THE GUIDELINES FOR IMPLEMENTATION
OF THE DEVELOPMENT
ZONE
The spirit is captured well in our vision… “Building the foundation of Bojonegoro Regency to be National Food
and Energy silos, which are Productive, Competitive, Prosperous and Sustainable”
TRANSFORMING OIL AND GAS REVENUE FOR SUSTAINABLE WELFARE
PARTICIPATORY PLANNING
FINE TUNING THE ACTION
PLANS WITHIN THE ANNUAL,
MID-TERM, AND LONG-TERM
REGENCY DEVELOPMENT
PLANNING
CAPITAL INVESTMENT
(ENDOWMENT FUNDS)
Benefits of this oil is not only felt the current generation but also future
Bojonegoro society does not want to experience “Oil Curse"
Creating economic growth
INVESTMENT STRATEGY
SOCIAL INVESTMENT OF EDUCATION AND HEALTH SECTOR
REGIONAL INVESTMENT (CREATED LOCAL
ENTERPRISES, CAPITAL INVESTMENTS IN LOCAL
ENTERPRISES, EMPOWER-MENT OF UMKM)
CAPITAL INVESTMENT (ENDOWMENT FUNDS)
CONSOLIDATION OFREGIONAL PLANNING SYSTEM
INTENDED TO FURTHER
IMPROVE THE QUALITY OF
PUBLIC PARTICIPATION IN
LOCAL DEVELOPMENT
PLANNING
TO BUILD A MORE
PARTICIPATORY LOCAL
PLANNING BY INVOLVING ALL
STAKEHOLDERS IN THE EARLY
STAGES
TOWARDS SUSTAINABLE PROSPERITY AND SOCIAL HAPPINESS
SUBSTANCE DEVELOPMENT PLANNING
1. POLITICAL APPROACH
2. PARTICIPATORY APPROACH
3. PROFESSIONAL APPROACH
POLITICAL APPROACH
1. PLANNING (MEDIUM-TERM) IS A TRANSLATION OF VISION AND MISSION OF REGENT
2. LONG TERM AND INTERMEDIATE DEVELOPMENT PLAN DEFINED BY LOCAL REGULATION
PARTICIPATORY APPROACH
1
2
3
development priorities
(APPLIED IN MEETING OF DEVELOPMENT PLANNING AT THE VILLAGE, SUB-DISTRIC AND DISTRICT)
PROFESSIONAL APPROACH
Operational Tools :
Tools to formulate the appropriate programs and activities of the main tasks function
Visionary Tools :
Tools to formulate the vision, mission and direction of regional policyManagement
Tools :Tools to manage regional development
Strategic Planning Tools :Tools to facilitate regional development planning
Regent decree number 31/2009 on Allocation of Funds for Villages
SOLUTION: CAPACITY BUILDING AT VILLAGES AND AROUND PRODUCTION SITES
REGENT DECREE NUMBER 31/2009 ON THE ALLOCATION OF VILLAGE FUNDS
HIGHLIGHTS OF THE LOCAL REGULATION NUMBER 31/2009
TO EMPOWER VILLAGES BASED
ON ADMINISTRATIVE AND IMPACTED
AREAS
12.5% OF REGENCY OIL & GAS REVENUE IS ALLOCATED FOR VILLAGE
FUNDS
PARTICIPATORY FAIRNESS AND DISTRIBUTIVE
FAIRNESS
Local regulation number 28/2012 on Transparancy of Governance in Extractive Industries
SOLUTION: TRANSPARENCY AND ACCOUNTABILITY OF THE USE OF OIL AND
GAS REVENUE
HIGHLIGHTS OF THE LOCAL REGULATION NUMBER 28/2012
OPEN PUBLIC ACCESS (PUBLIC
SPACE), INCLUDING DURING WEEKLY
PUBLIC DIALOG AT THE TOWN HALL EVERY FRIDAY
MADE THE REGENCY
DEVELOPMENT PLANNING AND ANNUAL WORK PROGRAM AND
BUDGET AS PUBLIC
DOCUMENTS
LOCAL REGULATION
NUMBER 28/2012 ON TRANSPA-RANCY OF
GOVERNANCE IN EXTRACTIVE
INDUSTRIES
Note: next presentation will explain further about this innovation
LESSON LEARN & CLOSING REMARKS
LESSON LEARNT:Ensure sustainability of the host community
welfare and happiness index is an integral part of the plan for exploitation of natural resources in Bojonegoro
This should be reflected in formulating related policies, utilization of local resources and capability, and the use of oil and gas revenue to optimally build the foundation for sustainability, local capability and competitive advantage, fairness, prosperity and happiness
We also recognize to need to improve the investment climate, particularly for oil and gas industry, improve public funds management process to ensure transparency and accountability, and last but not least, anticipate the negative ecological impact from oil and gas operations
THANK YOU...
DATA ENERGY AND MINERAL RESOURCES BOJONEGORO REGENCY – CLICK : http\\www.sda.bojonegorokab.go.id