BPK Finds Elnusa's Rp674 Billion ESP Investment Idle, Turns into Loss
Jakarta – A scandal over investment management has once again cast a shadow over a state-owned energy company. This time, the spotlight is on PT Elnusa Tbk after the Audit Board of Indonesia (BPK) revealed that a project to procure 30 Electric Submersible Pump (ESP) units and gas gensets, worth Rp674.4 billion, has failed to deliver the profits promised when the investment was approved. Instead of becoming a new revenue engine, the project, which was touted to boost the oil and gas services business, has turned into a burden for the company. The BPK audit noted that the economic value of the investment has turned negative by Rp32.08 billion. The findings are contained in BPK Audit Report Number 70/LHP/XX/12/2024 dated 27 December 2024, obtained by Monitorindonesia.com. The case raises serious questions: how could an investment of hundreds of billions of rupiah, initially projected to be profitable, end up as an idle asset and a source of loss?
In 2016, Elnusa purchased 30 ESP units and gensets with a total value of Rp674,449,606,274. At the time, management believed that the business of leasing ESPs to PT Pertamina EP would become a promising new revenue stream. The investment study presented a series of optimistic figures. Revenue was projected to reach Rp194.03 billion within three years. Net profit after tax (NPAT) was estimated to hit Rp30.97 billion. Moreover, the investment analysis displayed seemingly healthy indicators, including a positive Net Present Value (NPV) of Rp5.78 billion, an Internal Rate of Return (IRR) of 15.92 percent, and a payback period of just 2.27 years. However, the reality on the ground told the opposite story. The BPK audit found that actual revenue only reached Rp83.97 billion, less than half of the target promised in the investment proposal. The project even recorded a negative gross profit of Rp26.46 billion. In other words, the investment worth hundreds of billions of rupiah failed to generate profit and instead drained the company’s resources.
Even more concerning, the BPK found that since 2020, the ESP assets have practically generated no revenue. During the examination conducted in 2023, most of the ESP units were found merely stored in warehouses without clear utilisation. The equipment, purchased with company funds worth hundreds of billions of rupiah, ended up as passive assets rather than productive ones. This situation highlights weak business strategy and poor investment planning. Amid the need for efficiency in the oil and gas industry, these jumbo assets were left idle with no certainty of utilisation.
In its audit, the BPK firmly assessed that this problem stemmed from management’s lack of thoroughness in preparing the investment study and managing the assets post-procurement. Several officials linked to the management of this investment were named, including the President Director of PT Elnusa, the Managing Director of Drilling & Oilfield Services, the Division Head of Upstream Services, the Division Head of Marketing, and the Division Head of Asset Reliability & Productivity. In addition, the board of directors of PT Elnusa Trans Samudera for the 2016 period was also deemed to have been insufficiently meticulous in preparing the investment study, resulting in business assumptions that failed to reflect actual field conditions. These findings reinforce the suspicion that the investment decision-making process was not built on adequate risk calculations.
The public now has the right to question who should be held responsible for the Rp674 billion investment that resulted in an economic loss of Rp32 billion. How could such optimistic projections miss the mark so widely? Was the investment study conducted professionally and independently? Why were assets purchased at a fantastic value left idle for years without a clear rescue strategy? These questions are crucial, as a failed investment not only impacts the company’s performance but also has the potential to erode state asset value.
Based on these findings, the BPK has requested that the Board of Commissioners instruct the Board of Directors to take immediate steps to salvage the investment. The directors are asked to prepare a more comprehensive management study, strengthen risk mitigation, and seek opportunities to utilise all ESP units so they do not continue to be idle assets that burden the company. Without concrete action and clear accountability, this Rp674 billion project risks becoming a textbook example of how a large investment can turn into a source of loss due to weak planning, oversight, and management.