Indonesia. The State Enterprises Ministry is facing regulatory hurdles in making unlisted state oil and gas company Pertamina more transparent by requiring it to issue financial reports on the national bourse like a publicly trading company.
Pertamina, the biggest state company at Rp 150 trillion ($17 billion) in assets, is often referred to as the government’s “cash cow.” The Finance Ministry wants it to be more of an open book, hoping that public scrutiny will help root out corruption and inefficient management.
A more transparent Pertamina was also to serve as a model for the more than 140 state firms, holding total assets of Rp 2,500 trillion.
State Enterprises Minister Mustafa Abubakar, however, is pessimistic about implementing the plan in 2011, after missing the target this year.
“Passing the regulation next year will be difficult because we still have a long way to go in formulating rules for the establishment of non-listed public companies,” he said on Saturday.
Mustafa said the main difficulty in drafting the regulation was establishing whether the criteria would be based on the size of the companies’ assets or their “preparedness” to open their books.
Frederick Siahaan, Pertamina’s finance director, confirmed that the energy firm was waiting for the government to finalize the details of the plan.
“The target was initially this year, but it is unlikely to materialize this year because the government is still formulating the regulation,” Frederick said.
In order to become a non-listed public company on the Indonesia Stock Exchange (IDX), the Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK) is requiring Pertamina to submit financial reports for the last three years, legal opinions based on due diligence studies, administrative documents and a government regulation (PP) as the legal basis.
“We’re still doing due diligence and completing the audit of the 2009 financial report. The State Enterprises Ministry as the initiator and the Finance Ministry as the regulator are still discussing the PP,” Frederick said.
Erlangga Hartanto, chairman of House of Representatives Commission VI, which oversees state enterprises, urged the government to complete the regulation.
“Pertamina is a strategic state company. Increasing its transparency would pave the way for it becoming a world-class operation,” he said.
“State utility company Perusahaan Listrik Negara, which has a public service obligation and is also a strategic company, should also be encouraged to become a non-listed public company.”