Pertamina, unions clash over lingo<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Controversy over the sale of two giant tankers continued over
\nthe weekend as activists and workers argued with the management
\nof state oil and gas company Pertamina over the accounting terms
\nused to denote the ships.<\/p>\n
Pertamina's management insisted the two tankers, termed in the
\nindustry as Very Large Crude Carriers (VLCCs), were the company's
\ndebts rather than assets, but activists and workers insisted they
\nshould be defined as assets.<\/p>\n
Under the existing regulations, if the tankers are categorized
\nas assets, Pertamina needs approval from the Ministry of Finance
\nfor the sale of the VLCCs. Press reports have suggested that the
\nsale was made without prior approval of the ministry.<\/p>\n
The Professional Civil Society (MPM) and the Pertamina Workers
\nUnion (SPPSI) said the tankers, which are being built by South
\nKorea's Hyundai Heavy Industries, were the company's assets
\nbecause they were paid for by Pertamina.<\/p>\n
\"The divestment of the vessels is not converting debt. The
\nvessels are assets because Pertamina pays for them with its
\nfunds,\" Ismed Hasan Putro, chairman of MPM said over the weekend.<\/p>\n
\"Beside, construction of the vessels has progressed to 80 to
\n90 percent complete and the first tankers will be delivered in
\nearly July,\" Ismed said.<\/p>\n
Otto Geo Diwara, the union's chairman, said the VLCCs had been
\nput on the company's balance sheet as \"assets which are being
\ndeveloped\".<\/p>\n
\"It is unlikely the money paid by Pertamina to Hyundai has not
\nbeen converted into assets to match the balance sheet,\" Otto said
\nin the union's press release on Sunday.<\/p>\n
MPM and the union were commenting on a statement by chief
\ncommissioner of Pertamina Laksamana Sukardi on Friday, who
\ninsisted Pertamina had not sold tankers but debt.<\/p>\n
\"Please note, this is not selling the vessels, but selling the
\ndebt. Do not assume that these (the vessels) are our assets. This
\nis to scrap debt,\" Laksamana, who is the state minister of state
\nenterprises, was quoted by Kompas as saying.<\/p>\n
Pertamina said earlier the vessels were sold to fix its cash
\nflow problems and to repay debt. The company said cash flows had
\nreached critical levels due to higher crude prices.<\/p>\n
MPM, however, said Pertamina did not borrow to purchase the
\nvessels.<\/p>\n
\"Pertamina made a down payment and paid construction fees in
\ninstallments using its own cash,\" Ismed said.<\/p>\n
Under the previous management, Pertamina through its
\nsubsidiary Pertamina Tongkang planned to issue rupiah and dollar
\ndenominated bonds worth Rp 225 billion and $90 million
\nrespectively in the local and international markets to finance
\nship purchases and for working capital.<\/p>\n
However, the current management quickly canceled the bond
\nissue plan and announced plans to sell the tankers.<\/p>\n
Ismed said the decision to cancel bonds and loan from Korean
\nExport Import Bank, had worsened Pertamina's cash flow as it had
\nto use internal funds to pay for the VLCCs' construction.<\/p>\n
He said the Korean Export Import Bank had offered a low
\ninterest rate of 4.6 percent a year.<\/p>\n
Maritime expert Raja Saut Gurning said although Pertamina
\nwould make a profit of $28 million from the sale of each tanker,
\nthe company would have to set aside $12.6 million a year, or
\n$35,000 a day, in its budget to charter a similar type of tanker
\nto carry crude from Middle East to Cilacap, Central Java.<\/p>\n
Pertamina owns the largest refinery in Cilacap, which is
\nspecially designed to process Arabian light crude. Arabian light
\ncrude makes up 45 percent of total imported crude into the
\ncountry, which averages at 300,000 barrels a day.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/pertamina-unions-clash-over-lingo-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}