Pertamina struggling to improve its image<\/p>\n
By Johannes Simbolon<\/p>\n
JAKARTA (JP): The state oil and gas company, Pertamina, which
\nhas been rocked by many scandals over the past several decades,
\nhas returned to the press limelight with a battered face this
\nyear, following the downfall of former president Soeharto from
\npower in May.<\/p>\n
The public has long understood that the country's largest and
\nmost strategic company has become a cash cow of corrupt officials
\nand Soeharto's family and cronies for the 32-year rule of the
\nformer strongman.<\/p>\n
But, in the wake of Soeharto's downfall, revelations by the
\ncompany over massive involvement of Soeharto's family and cronies
\nin its oil and gas business has greatly stunned the public.<\/p>\n
Pertamina said it had awarded projects to, or signed contracts
\nwith, at least 159 companies linked to Soeharto's family, cronies
\nand top officials through unhealthy business practices, including
\ncorruption and collusion.<\/p>\n
Pertamina's former president Soegianto, vowing to root out
\ntraces of corruption, collusion and nepotism in the company,
\ncanceled or renegotiated most of the contracts, or retendered the
\nprojects.<\/p>\n
He also closed company marketing offices in Houston, London,
\nand Singapore, and reduced the number of marketing staff in Tokyo
\nthis year for efficiency.<\/p>\n
Pertamina also implemented tight efficiency programs in
\nseveral pilot projects, including its own oil and gas field in
\nPrabumulih, South Sumatra, and its refinery in Balikpapan, East
\nKalimantan.<\/p>\n
All these actions, Soegianto claimed, would enable Pertamina
\nto save US$64.7 million in dollar terms and Rp 313.3 billion
\n(US$40.1 million) in rupiah terms per year.<\/p>\n
But, before long, the public was again surprised by a finding
\nby the Development Finance Comptroller of indications of massive
\ncorruption in the company.<\/p>\n
The comptroller said it had found indications of corruption in
\nthe company that could inflict a Rp 191 billion loss on the
\nstate. The evidence was related to new cases of corruption, not
\ncontracts and projects linked to Soeharto's family and cronies
\nthat were purged recently from the company's book.<\/p>\n
The comptroller also found indications of corruption in other
\nstate companies under the technical supervision of Ministry of
\nMines and Energy, including publicly listed general mining
\ncompany PT Aneka Tambang, electricity company Perusahaan Listrik
\nNegara, gas distribution company Perusahaan Gas Negara and coal
\nmining company Bukit Asam. But the amount of money that could be
\nlost by Pertamina is higher than in these companies.<\/p>\n
Legislator Priyo Budi Santoso of the Golkar party said: "Many
\npeople, including myself, felt genuinely relieved by Pertamina's
\nefforts to root out corruption, collusion and nepotism."<\/p>\n
"But, the comptroller's findings are really disappointing. I
\ndeplore the fact that many people in the company are still knee-
\ndeep in corruption," Priyo told The Jakarta Post.<\/p>\n
Soegianto, who took over the helm of the company in January
\nthis year, is regarded by many as "clean" but the government does
\nnot seem to consider him suitable for the giant task of cracking
\ndown on the acute inefficiencies in Pertamina and changing it
\ninto a world-class oil and gas company comparable to Malaysia's
\nPetronas.<\/p>\n
Minister of Mines and Energy Kuntoro Mangkusubroto once said,
\n"We want to make Pertamina comparable to Petronas."<\/p>\n
Kuntoro, believing competition boosts efficiency, ascribed
\nPertamina's inefficiencies to its monopolies on the country's oil
\nand gas industry.<\/p>\n
Shortly after assuming his ministerial post in May, Kuntoro
\nannounced the government was going to draft a new oil and gas law
\nto scrap Pertamina's monopolies awarded by the oil and gas law of
\n1971.<\/p>\n
Under the new law, Kuntoro said, the government would free it
\nfrom the unprofitable job of providing fuels to the public at
\nsubsidized prices, which currently account for 70 percent of the
\ncompany's operations.<\/p>\n
Pertamina will no longer hold monopolies in the downstream
\nsector of oil and gas as the government will open this to the
\nprivate sector in competition with Pertamina's refineries. The
\nopen competition is expected to force Pertamina to work
\nefficiently and end corrupt activities, otherwise it would become
\na loser and a laughing stock in the oil and gas industry.<\/p>\n
Kuntoro also said the ministry would take over from Pertamina
\nthe jobs of regulating and managing oil and gas contractors.<\/p>\n
In a nutshell, Pertamina will be designed as a limited
\nliability company with the sole job of making money by finding
\noil and gas and processing it into fuels.<\/p>\n
Kuntoro said on Friday the government would send the draft law
\nto the House of Representatives for deliberation later this
\nmonth.<\/p>\n
New boss<\/p>\n
Kuntoro was rumored to be preparing his friend, Erry Riyana
\nHardjapamekas, president of the publicly listed tin mining
\ncompany PT Timah, for the top job in Pertamina to replace
\nSoegianto. Kuntoro served as Timah's president from 1989 to 1994.<\/p>\n
Analysts guessed Kuntoro, who was lauded for changing Timah
\nfrom a corrupt company into one of the world's most efficient tin
\nmining companies, was contemplating a plan to shed a large number
\nof Pertamina's 30,000 employees to improve its efficiency, as he
\ncontroversially did in Timah.<\/p>\n
Erry was one of four candidates presented by a ministerial
\nteam to President B.J. Habibie but the president opted for his
\nformer assistant, Martiono Hadianto, then director general of
\ncustoms and excise at the Ministry of Finance.<\/p>\n
Martiono served as an assistant to the then vice president
\nHabibie from March to May this year, until Habibie took over the
\nnation's top position after Soeharto resigned.<\/p>\n
Martiono was installed on Dec. 12.<\/p>\n
Businessman Fadel Muhammad, who is known to be active in oil
\nand gas services, regards Martiono a right choice, saying, "he is
\na tough person, who will be able to end monopolies and stage open
\ncompetition in Pertamina's business,"<\/p>\n
But, several legislators, including Jusuf Rizal Tjokroaminoto
\nof the United Development Party, suspected Martiono's
\n"cleanliness", citing his closeness to Aburizal Bakrie, chairman
\nof the Bakrie group.<\/p>\n
Jusuf alleged at a recent hearing between Kuntoro and the
\nHouse Commission V for industry, mining, trade, manpower,
\ncooperatives and the environment, that Martiono's wife had once
\nworked for Mindo Petroleum, which controlled Permindo Oil Trading
\nCo., one of two companies which held monopolies in oil and fuel
\nimports for Pertamina for less than two decades.<\/p>\n
Mindo was owned by Nirwan Bakrie, Soeharto's cousin
\nSudwikatmono and Soeharto's son Bambang Trihatmodjo and friends.<\/p>\n
At the behest of the government, Pertamina ended contracts
\nwith Permindo and started importing oil and fuels by itself in
\nJuly this year.<\/p>\n
The accuracy of the legislator's allegation remains unknown,
\nbut Pertamina officials amusingly read and photocopy all news
\narticles regarding their new boss' family.<\/p>\n
Analysts said it is not easy for Martiono to change Pertamina
\ninto an efficient, clean and proud company in the near future.
\nFurthermore, Martiono may not last long in the company, given its
\nties to Habibie, whose political survival remains in question.<\/p>",
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