The Open Government Partnership, launched 20 September in New York, invited Revenue Watch to show how collecting and sharing information on natural resources can increase government revenues and improve the management of natural resources. Patrick Heller, RWI legal advisor, discussed work by RWI and its partners in two oil-rich districts of central Java, in Indonesia.
The project, ongoing from 2008 to 2011, aimed to help the two districts make their oil revenues transparent and use the information for sustainable development planning.
Background on the Districts
Blora and Bojonegoro are home to more than two million people, most of them dependent on subsistence agriculture. Their villages and fields also lie atop a vast, recently discovered oil field known as the "Cepu Block." If these reserves are developed, they could account for as much as 20 percent of Indonesia's oil production. But this underground wealth also brings risks.
Indonesia's national government collects oil revenues and allocates shares to the country's regions as well as the local governments where the oil is produced. But this sharing of revenues does not automatically equip local governments to manage the funds. Nor does it guarantee that local governments will be transparent with citizens about budgets and development plans—or even have the capacity to develop plans for sustainable development.
Blora and Bojonegoro now have an opportunity to create meaningful, sustainable social and economic development—if local authorities have the necessary knowledge and tools to manage their windfall from the Cepu Block.
RWI's Work in Blora and Bojonegoro
To help the districts get the maximum benefit from their oil wealth, RWI and our international partner the Local Government and Public Sector Reform Initiative provided financial support, expert advice and training to national and local citizens' groups as well as to the local governments and oil companies.
We held intensive training sessions with national and local civil society groups on topics including revenue tracking, revenue transparency and revenue sharing. The national government offered support by sending representatives from the Finance Ministry and the Ministry of Economic Affairs to discuss the technicalities of oil revenues.
Equipped with more knowledge, the citizens' groups convinced the governments of Blora and Bojonegoro to sign an agreement committing all the parties to develop a transparency plan and a plan for sustainable development—key examples of better governance of revenues from oil.
The partners held public meetings to help communities manage their expectations about the impact of future oil revenues. From the 100 or so participants, teams were chosen for more intensive workshops. The members included farmers' groups, women's groups, parliamentarians, NGOs, religious organizations and government officials who would eventually help formulate policy.
In the workshops, RWI and our partners discussed issues of transparency, freedom of information, corporate social responsibility and community development programs. We also delved deeper into how oil can generate great wealth but also bring instability, unwise spending and corruption—unless transparency and sustainable development are core values.
Our local partners regularly wrote opinion articles in national, provincial and local newspapers on transparency of information, freedom of information, details of the Cepu Block and the disruptions that oil wealth can bring.
Involving Local Government
When elected officials in Blora raised questions about the Cepu Block’s economic potential, our local partners offered technical advice to the government on oil revenues and securing a fair deal. Meanwhile, officials from Bojonegoro recognized that they lacked key revenue information from the national government, which made budgeting and development programs far more difficult.
RWI also offered local officials and citizens' groups information about the Extractive Industries Transparency Initiative (EITI) and how to work and communicate with oil companies. Our audiences in both Blora and Bojonegoro responded by including information on oil companies' corporate social responsibility and community development programs in their transparency plans.
Initial Results
In Blora, the district government formally created transparency standards and included funds in its 2011 budget for a transparency team. The standards apply not only to revenues but also to health and safety issues, environmental impacts, corporate social responsibility and community development. Thanks to the planning process, the district increased the 2011 budgets for health and education. It prepared to put into force the sustainable development plan created as part of this project.
In Bojonegoro, the district government expects to create transparency regulations before the end of 2011. As in Blora, the standards apply not only to revenues but also to health and safety issues, environmental impacts, corporate social responsibility and community development. The government is drafting regulations for investments, in anticipation of an oil boom. As a result of the contacts initiated by this project, the main oil company in the district has begun coordinating its community development projects with the district's planning agency.
Lessons Learned
The project showed the importance of involving all parties—especially the public. A better-informed citizenry is crucial to advocacy and for creating programs for sustainable economic and social development. Involving all parties can help win support from even the most reluctant players, in this case, oil companies.
A larger lesson learned in Java is that there is no such thing as too much capacity-building or technical assistance. Even if a project is locally-based, we cannot ignore the importance this advocacy can have at the national level.
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