Ibnu says Pertamina can't compete<\/p>\n
By Johannes Simbolon<\/p>\n
JAKARTA (JP): The founding president of state oil and gas
\ncompany Pertamina, Ibnu Sutowo, said on Thursday the bill on oil
\nand gas mining submitted to the House of Representatives last
\nweek should be rejected because it would diminish Pertamina's
\nrole in the industry.<\/p>\n
Ibnu said the bill's stated objective of allowing Pertamina to
\nconcentrate on its core business of oil and gas exploration and
\nproduction in competition with foreign companies was unattainable
\ngiven the company's severe financial restraints.<\/p>\n
\"Turning Pertamina into a competitive oil and gas company is
\nonly a daydream,\" Ibnu told The Jakarta Post.<\/p>\n
\"Pertamina won't be able to compete with foreign companies
\nbecause it has no money and does not control the market,\" he
\nsaid, warning that exploration and production is a high-risk and
\ncapital intensive venture.<\/p>\n
Ibnu, president of Pertamina for more than eight years until
\n1976, said the company lacked financial resources because most of
\nits revenues were taken by the government to finance the state
\nbudget.<\/p>\n
He is afraid that the law, if enacted, could diminish
\nPertamina's role in the oil and gas industry unless the company
\nwas able to raise loans or receive government funds to support
\nits exploration and production activities, he stated.<\/p>\n
\"If Pertamina had enough money, we wouldn't need any foreign
\noil and gas contractors here because Pertamina could simply buy
\nthe necessary technologies to develop the hydrocarbon resources
\nitself. However, the fact is that Pertamina has no money,\" Ibnu
\nsaid.<\/p>\n
According to Ibnu, in order to secure high earnings from oil
\nand gas resources, the government has to control the management
\nof oil and gas companies and determine the prices of oil and gas.<\/p>\n
This job has so far been done, quite capably, by Pertamina,
\nadded Ibnu, who was blamed largely for Pertamina's technical
\nbankruptcy in late-1975 under a mountain of foreign debts
\nreaching some US$10 billion.<\/p>\n
Ibnu criticized the bill's provision which transfers
\nPertamina's authority to manage foreign oil and gas companies
\noperating in the country under the production sharing contract
\n(PSC) system to the government.<\/p>\n
Ibnu believes the government is unable to manage foreign
\ncontractors, citing several cases in the mining sector where the
\ngovernment failed to settle disputes between mining contractors
\nand local communities.<\/p>\n
\"The current system is good enough. So what are the benefits
\nof changing it,\" Ibnu asked.<\/p>\n
Ibnu also encouraged the government to maintain the obligatory
\nPSC system because it had \"proved to be greatly beneficial to the
\ncountry\".<\/p>\n
Ibnu is known as the inventor of the PSC system, which has
\nbeen imitated by several developing countries.<\/p>\n
Under the system, Pertamina, on behalf of the government,
\nholds the management of foreign oil and gas contractors. As such,
\nit can ascertain the government's share in the contractors'
\nrevenues.<\/p>\n
The proposed bill will allow foreign oil and gas companies to
\nchoose contracts other than the PSC for their operations.<\/p>\n
Ibnu denied the allegation that the rampant corruption,
\ncollusion and nepotism in Pertamina's business was caused by
\nineffective control mechanisms in the existing oil and gas law.<\/p>\n
\"The current law is not corrupt, but the people are,\" he
\nasserted.<\/p>\n
\"We had the same law when I was at the helm of Pertamina (from
\n1968 to 1976). At that time there was no corruption in the
\ncompany,\" Ibnu claimed.<\/p>\n
He said corruption in Pertamina started when then president
\nSoeharto, his relatives and cronies began doing business with the
\ncompany.<\/p>\n
Ibnu was fired by Soeharto in 1976 after Pertamina defaulted
\non foreign debts incurred through shady business deals.<\/p>\n
However, Ibnu insisted that Soeharto fired him because he kept
\nblocking Soeharto's relatives and friends from entering dubious
\nbusiness deals with Pertamina.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ibnu-says-pertamina-cant-compete-1447893297",
"image": ""
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