An Indonesian court will rule on Tuesday on the validity of an oil and gas law aimed at ending a state monopoly in the sector, a move that has industry executives fearing for billions of dollars of contracts. The decision by the newly established Constitutional Court will be its second in a week, after judges last Wednesday annulled a 2002 electricity law deregulating the power sector.
A number of non-governmental bodies and a union representing workers of state oil and gas firm PT Pertamina have alleged oil and gas Law No 22/2001 violates the constitution, a court official said.
The decision would be announced by the court around 10:00 am (0300 GMT) on Tuesday, the official said.
Industry players said a move by the court to strike down the law would shock existing investors and further damage the country's fragile investment climate.
"We don't know what the outcome is going to be," Yudiana Ardiwinata, president director of Caltex Pacific Indonesia, the country's dominant producer, told Reuters.
"My concern is that if this law is going to be struck down, then it will create some more legal uncertainty. We have enough uncertainty nowadays," said Ardiwinata, who also serves as vice chairman of the Indonesian Petroleum Association (IPA).
However, Energy Minister Purnomo Yusgiantoro said on Monday he was confident the law would not be struck down.
"I am optimistic the law will not be changed, because the contents are acceptable," he told reporters.
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