According to the Indonesian Constitution, any Vital and Strategic Sectors for the People's Interests have to be managed by the State. Oil and Gas until now are two of the Strategic and Vital Business Sectors in Indonesia. Therefore Indonesia establishes an institution namely the Special Task Force of Executive Oil and Gas Business Activity (SKK Migas). SKK Migas deals with Production Sharing Contracts with Exploration and Exploitation (Upstream) Oil and Gas Companies. In its activities, there are many regulations apply and required to obtain permits. The current problem nowadays are related to the type of the permits, the regulations and procedures to follow, as well as institutions/permit issuers to deal with are too many so that the permit system for Upstream Oil and Gas have caused handicaps for the industry to grow competitively. While on the other hand Indonesia still has a high dependency on Oil and Gas Industry for State Income reason and Energy Resilience. The old paradigm of the bureaucracy system in one the most causes of inefficiency and ineffectiveness of bureaucracy in Indonesia. Even though the reformation has been started since 1998 however the change of old bureaucratic system and mentality of the bureaucrats into the new paradigm of good governance is still very less and tend to be progressing very slowly. Overlapping and redundancies of regulations, authorities have caused Indonesia is less competitive destination comparing to the neighboring countries in attracting foreign investment.

The “Forestry Borrow to Use (FBU) Permit” is an approval of the Ministry of Forestry to allow non-forestry activity to be conducted in Forestry Area. The Upstream Oil and Gas (OG) activity is commonly conducted in suburban or remote area where is located in such forestry area. In this kind of situation, a permission process must take place. So that there is a hierarchy: The Upstream OG activity Executor shall be in position as the Applicant, while the Ministry of Forestry shall be in the “higher” position as the Approver/Issuer the FBU Permit. This shows that between Governmental Institutions, one’s position is subordinate from another, thus causing a situation in which one institution’s plan can be disapproved by another government institution’s decision.  Is this hierarchical structure conforming with the new values of coordination, synchronization and harmonization among government institution as required by Good Governance? This paper will analyze it in the perspective of Ecology Governance, Development Administration, Administrative Law in the Democratic Country

<p>Abstract Indonesia is a country which have oil and gas reserve as one of the country natural resources. Until now, the government management on oil and gas resources remain plays such important role in both strategic aspect as the state income contributor and the energy resilience. The Production Sharing Contract (PSC) Scheme applies in the management system of exploration and exploitation (Upstream) of oil and gas resources that is mandated by the 1945Constitution that should be managed for the greatest people prosperity. The PSC Scheme is a type of collaboration or partnership agreement between Government Institution (Representative) with Private Parties (National or Multi-National Corporation) to mutually explore and exploit the resources for the purpose of the Government mission (to provide people prosperity) in one hand, and to produce added value for the private corporation on the other hand. PSC Scheme has been enabling both parties joint and share genera and technical management aspect, asset management aspect, as well as financial / fiscal aspect encompass, therefore this scheme should be considered as part of the New Public Finance in implementation; Key Words: New Public Finance, Production Sharing Contact, Oil and Gas Resource Exploration and Exploitation.</p><p> </p>

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