Restructuring program cuts Pertamina's costs<\/p>\n
JAKARTA (JP): State-owned oil company Pertamina's
\nrestructuring program, which has been accelerated from five years
\nto three years, has helped reduce its operational costs by about
\nRp 70 billion (US$30.43 million) per year, its president said.<\/p>\n
\"The restructuring program has also succeeded in eliminating
\nPertamina's operational losses and lowering its operational
\ncosts,\" Faisal Abda'oe said on Sunday after a ceremony to
\ncelebrate the company's 38th anniversary.<\/p>\n
Pertamina's has detailed its restructuring program as
\nconsisting of efficiency improvement, a reduction in the number
\nof employees and the establishment of profit centers.<\/p>\n
Abda'oe said that improved efficiency has improved the
\ncompany's ability to meet the increasing domestic demand for
\nfuel, which rises seven percent annually.<\/p>\n
He explained that Pertamina, under the restructuring program,
\nhad shifted the function of its operational units into profit
\ncenters that contribute to its revenues.<\/p>\n
\"Efficiency improvement will help increase Pertamina's
\nprofits,\" Abda'oe said.<\/p>\n
He said his company booked a net profit of Rp 29.4 billion in
\n1994, compared to Rp 26.7 billion in 1993.<\/p>\n
He said that although only 30 percent of Pertamina's
\noperations are profit-oriented, the company is able to repay its
\nforeign debts.<\/p>\n
About 70 percent of Pertamina's operational activities, under
\nthe assignment of the government, are aimed at meeting the needs
\nof the people.<\/p>\n
Pertamina, for example, receives a government subsidy if its
\ncosts for the domestic distribution of fuel are higher than its
\nsales revenues. In turn, Pertamina is supposed to pass on its
\nprofits from fuel sales to the government if the costs are lower
\nthan sales revenues.<\/p>\n
As for downsizing, Abda'oe would not say if the company had
\nreduced the number of its employees by its target of 15,000.<\/p>\n
Last year, Abda'oe told a hearing at the House of
\nRepresentatives that Pertamina would cut the number of its
\nemployees from 46,000 to 31,000 within five years.<\/p>\n
Abda'oe said on Sunday that his company had also simplified
\nits bureaucratic procedures to anticipate tougher competition in
\nthe free trade and globalization era.(04)<\/p>",
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