Govt defends Widya's appointment

Fitri Wulandari, Jakarta

State Minister of State Enterprises Laksamana Sukardi defended on Thursday the appointment of Widya Purnama as the new president of state oil and gas company PT Pertamina, saying the company needs a professional leader in its transition into a profit- oriented entity.

Laksamana explained that aside from his experience in leading blue-chip telecommunications company PT Indosat, Widya also had the advantage of being a Pertamina outsider, which should make him free from the influence of the "mafia" in the country's fuel business.

"Pak Widya is clean. Since he is not from Pertamina, he is not contaminated by the 'mafia'," Laksamana said.

For decades Pertamina has been one of the biggest cash cows of corrupt government officials, politicians and influential businessmen described as mafia-like. This has led the company to suffer severe cash flow problems.

Laksamana's statement came amid doubts about Widya's ability to turn around the ailing Pertamina, particularly as the 50 year old has no experience in the oil business, seen crucial at a time when the company's business paradigm is changing with the termination of its business monopoly and the government's drive to liberalize the oil and gas sector.

Widya was installed as the new CEO of Pertamina on Wednesday in a major reshuffle that appeared to be an image-building measure by the government following recent scandals at the company ahead of the September presidential election. Other new members of the board of directors came from within Pertamina.

"Pertamina must be able to compete and become a profit- oriented company," Laksamana said.

Pertamina became a limited liability company following the implementation of Law No. 22/2001 on oil and gas that stripped it of its monopoly in the sector, meaning it will eventually have to compete with private companies in the sector, including foreign giants.

Widya, who started his career at Indosat from the bottom as a low-ranking official and became its president in 2002, said that he aimed to turn Pertamina into one of Southeast Asia's best oil and gas companies, even beating the profitable Malaysian oil firm Petronas.

But there has been speculation that the appointment of Widya, who has been credited with the successful sale of the government's more than 41 percent stake in Indosat to Singapore Technologies Telemedia in 2002, was made to facilitate the sale of Pertamina shares to Singapore's Temasek.

Widya quickly brushed aside the allegation, saying there was no plan to sell the company to foreign investors.

"Would it be possible for me to sell Pertamina? To do that I would need to obtain approval from the President and the House of Representatives. I don't pay any attention to rumors," Widya said.

Meanwhile, Ramses Hutapea, an expert in the oil and gas industry, said Pertamina would not be able to match Petronas because the company only served as a money-making machine for the cash-strapped government.

Under the current system, Ramses said the government took 60 percent of Pertamina's revenue from every sale of crude oil.

At the same time, Pertamina will lose income from overseeing production-sharing contractors as well as retention fees with the scrapping of its monopoly in the sector.