Govt defends Widya's appointment

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.