Fuel subsidies and Pertamina
Sometime during or shortly after President Susilo Bambang Yudhoyono's first 100 days in office, the public will likely pay 40 percent more for fuel (The Jakarta Post, Dec. 1).
This news will likely cause a variety of differing reactions.
One point is crystal clear, that if such price hikes become a reality, most ordinary people will feel heavier burdens on their shoulders.
After the 1970s oil boom, the government adopted a policy to subsidize domestic oil consumption. Since that time, the policy has been difficult to reverse as it affects most people's daily lives. Each time fuel prices are hiked, the general public reacts emotionally -- because people know they will be hit in the pocket in more ways than one -- primarily by a general increase in commodity prices.
Such subsidies are acceptable whenever the country's oil exports are higher than its imports. But during the past four or five years Indonesia's oil production has been continuously shrinking, meaning that this country is no longer able to fulfill its export quota set by the Organization of Petroleum Exporting Countries (OPEC). Consequently, the country's oil imports are higher than its exports, and beginning this year Indonesia has become a net importer of oil.
The soaring oil prices, which have been enjoyed by all net oil-exporting countries, have forced the government to set aside an even greater amount of cash for the subsidies.
What is saddening is that the management of the state oil company Pertamina; once dubbed "a state within a state" because of its "unique" management in the 1970s under the late Ibnu Sutowo; has not done much to increase oil production. Despite this, its managers enjoyed a huge salary hike three months ago, although they were already being paid far higher than executives in other state-owned enterprises.
Pertamina, as one of the country's most important assets, should face a total overhaul of its organization. All top-level managers down to operation managers should be replaced by those who are truly dedicated to the development of this state company.
The company's financial management, including its remuneration system, must also be altered so that it is compatible with other state-owned enterprises.
The current State Minister of State-owned Enterprises, Soegiharto, with his previous experience in Medco Oil, is now busy restructuring his ministry (Republika, Dec. 3). Soegiharto is the man who can restructure this state oil company and turn it into a profitable and internationally recognized and respected company. This will eventually help contribute to the development of the country.
M. RUSDI, Jakarta