ESDM Prepares New Regulation of the Minister on Community Empowerment

The Directorate-General of Oil and Gas of the Ministry of Energy and Mineral Resources (“ESDM”) plans to elevate the regulatory status of the Community Development and Empowerment Program (“PPM”) to a Regulation of the Minister (“Permen”). Currently, the provisions governing the PPM are still based on a Decree of the Director-General of Oil and Gas, as well as the Operational Guidelines (“PTK”) of the Special Task Force for Upstream Oil and Gas Business Activities (“SKK Migas”).

“We actually plan to propose this as Permen,” said Dedi Suprianto, Cooperation Coordinator at the Directorate-General of Oil and Gas.

Dedi explained that this regulatory change aims to shift the PPM’s approach from merely providing short-term social assistance to serving as an instrument for building social resilience among communities surrounding oil and gas operation areas. With this approach, the PPM is expected to mitigate various social risks, ranging from land conflicts, disruptions to facility access, and community complaints to demands from local workers. These risks are considered to have the potential to cause production losses or a decline in asset value.

Under the new regulation, Cooperation Contract Contractors (“KKKS”) will also be required to allocate their PPM budgets to a number of priority pillars. These pillars include economic empowerment and micro-, small-, and medium-scale enterprises (“MSMEs”), human resource development and education, infrastructure and public facilities, the environment and regional resilience, as well as religious and social institutions.