Jakarta (AsiaNews) - In a surprise decision that has caused a sensation among ordinary Indonesians, the Constitutional Court (Mahkamah Konstitusi or MK) ordered the dissolution of Upstream Oil and Gas Regulator Company, better known as BP Migas. The ruling by the country's highest court, issued yesterday, brings to an end the activities of the state-owned oil and natural gas giant because the company's existence in unconstitutional, a violation of the principles of the Charter of 1945.
The company "has been officially dissolved," Chief Justice Mahfud MD said. "All functions and responsibilities go to the Indonesian Ministry of Oil, Gas, and Energy." However, the ruling has caused consternation in the energy sector since all business deals had to go through BP Migas.
According to the ruling, the company's structure violated constitutional principles whereby government agencies cannot set up business companies. What is more, for many Indonesians, the state-owned company caused huge financial losses by "selling out" national assets instead of favouring a local company, Pertamina.
The controversy began when a legal case was brought against the company because of certain management decisions. Various Muslim organisations, including two of the most important like Nahdlatul Ulama (NU) and Muhammadiyah, joined the suit against the company.
According to the court, the company is in violation of Article 33 of the constitution, which states: "The land, the waters and the natural resources within are under the powers of the State and must be used to the greatest benefit of the people."
In the wake of the court decision, an oil and gas expert was quick to reassure foreign investors about contracts. BP Migas's dissolution will not automatically end existing deals. It will be up to the ministry to determine whether to respect them and assume liabilities under the law.