Pertamina: Not just technical but also ethical?<\/p>\n
Protus Tanuhandaru
\nJakarta<\/p>\n
While not knowing when oil prices will ever come back to
\nearth, having Indonesia as a net oil-importer country,
\nnotwithstanding its 43-year OPEC membership, demonstrates that
\nthe condition of the national oil industry is much worse than
\nwhat it had been many years ago.<\/p>\n
There is a scarcity of fuel caused by delays in disbursing
\nfunds from the Ministry of Finance, poor levels of efficiency due
\nto mismanagement and rampant corruption, and ill-suited state
\nregulations that are most unlikely to bring investment back to
\nIndonesia -- all of which collectively undermine the dynamism of
\nthe oil industry.<\/p>\n
And as long as these serious conditions are neither redressed
\nnor contained, the state oil company Pertamina is more likely to
\nbe blamed than anyone else, despite the fact that the problems
\nthat Pertamina confronts are not just technical, but also broadly
\nethical -- the sort they cannot and should not deal with alone.<\/p>\n
One of the ethical problems, which in part guarantees that
\nPertamina stays ineffective is the ambiguous role of the Oil and
\nGas Regulatory Agency. Formed by the government to bring greater
\nefficiency to Pertamina while ensuring the greater welfare of the
\npeople, the role of such a legitimate, non-departmental agency is
\nto regulate and monitor all activities relating to the oil
\nindustry.<\/p>\n
But functionally, it has gone awry as the agency has been
\nfound engaging in activities beyond regulating and monitoring,
\nbut also in activities which should be the task of Pertamina --
\nsuch as negotiating terms with foreign companies and oil traders
\n-- thereby raising the question of whether the role of such an
\nagency has not been derailed from what it was originally
\nestablished to do.<\/p>\n
And the bottleneck is being further confounded by
\nincongruously overlapping state regulations, as one requires
\nPertamina to directly contribute the profit it receives to the
\nnational income whereas another stipulates that it continuously
\nassures the availability of domestic fuel supply.<\/p>\n
Consequently, the company, with its resources unsustainably
\nstretched, is not -- and will never be -- capable of anticipating
\nthe continuously skyrocketing price of crude oil on the
\ninternational market.<\/p>\n
In addition to the perpetual cash flow problem other
\ngovernmental bodies, with their red tape, have been making it
\ndifficult for Pertamina to operate in a commercially timely
\nmanner. An example of this was the hike in domestic fuel prices
\ntriggered by a shortage of fuel because the Ministry of Finance
\ndid not endorse the amount requested to be disbursed in a timely
\nmanner so Pertamina could haul petroleum into Indonesia just to
\nfulfill the domestic fuel demand.<\/p>\n
Unless these problems are resolved, Pertamina will remain
\ninefficient, commercially impotent, will not reap optimal profits
\nand will be an endless burden continuously draining the national
\nbudget.<\/p>\n
To begin resolving these ethical problems, however, does not
\nmean Pertamina should deal with them alone, but to have an
\nadditional institution -- not related to the stakeholders -- to
\nanalyze and clarify whether roles, regulations, and interventions
\nhave been ethically appropriate or not to date.<\/p>\n
If they have not, such an institution will have to place the
\nactivities back on track, to amend regulations which do not work
\nand which overlap, and to minimize the red tape of other
\ngovernment agencies that interfere in Pertamina's activities.<\/p>\n
Waiting for this institution to deal with ethical issues, the
\nprerequisite to revamp Pertamina -- before it became very much
\nprivatized, -- is to revitalize its assets, maximize its profit
\nand most importantly, to have it run as a proper commercial
\nbusiness that applies pure, professional business principles.<\/p>\n
Core issues should include maximizing shareholder (the public)
\nvalue and not patronizing other groups and assorted vested
\ninterests. And as soon as regulations and roles are no longer
\nambiguous and overlapping, Pertamina can then become a world
\nclass corporation that is transparent, accountable, professional,
\nand most profoundly, financially independent and commercially-
\nreceptive to the dynamic condition of the global oil market.<\/p>\n
Still, making these two work abreast will definitely require
\nclose coordination in which corporate leadership is somewhat
\nextraordinary -- capable of carefully restructuring the company
\nwhile maintaining the trust of its shareholders, engaging other
\nregulators and building credible lines of communications with the
\nwider community. The corporate leader needs to be able to think
\noutside the existing box of management and policy approaches.<\/p>\n
Seeing these as criteria, the potential leader is very
\nunlikely to be found within Pertamina, as it is one of the
\nstakeholders whose problems needs to be solved, but should
\nperhaps be someone who has had extensive experience in how to
\nresolve business issues that are ethically and politically
\nenmeshed, and who has neither personal commercial nor other
\ninterests that may be considered liable to compromise objective
\nmanagement and policy making.<\/p>\n
Since restructuring means getting foreign investment to
\nfinance the activities related, only by being free of corruption
\nand other ethical challenges can such a leader be capable of
\nhaving close rapport with -- and win the hearts and minds of --
\npotential investors, both foreign and domestic, who have been
\nskeptical of how and when the Indonesian oil and gas industry,
\nhowever abundant resources are, will change for the better.<\/p>\n
While candidates still have to think of how to meet these
\ncriteria, other challenges such as gender perspectives, however,
\nmight arise when women offer their leadership, but are rejected
\nmerely on the basis of gender and deemed as not having the
\n\"mettle and the logical reasoning\" men are assumed to have.<\/p>\n
But this is not true.<\/p>\n
Such preponderant misconceptions have long been debunked and
\nare no longer valid, as there are many women -- Indonesians
\nincluded -- who have provided great corporate leadership,
\nespecially to companies in time of great distress. And, likewise,
\nthe whole idea of how to appropriately solve the ethical problems
\nwill be mere platitudes and meaningless if the gender perspective
\nbecomes another ethical issue. Keeping women out of the national
\noil industry unethically abridges their right to lead the state
\noil company.<\/p>\n
So overall, solving potential ethical issues, whatever they
\nmight be, would mean to understand how to ethically approach them
\nand finding the best solution.<\/p>\n
The writer is a World Bank consultant. This article reflects
\nhis personal views. He can be contacted at protust@yahoo.com.<\/p>",
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