Managing Pertamina

Managing Pertamina

First, I would like to congratulate Mr. Baihaki Hakim on his
appointment as Pertamina president director. As a former
president director of PT Caltex Pacific Indonesia, the largest
producer among Pertamina's Production Sharing Contractors (PSC)
in Indonesia, I believe no one will doubt your knowledge of the
oil business or your contacts in the industry.

In his speech prior to your installment to your new position,
President Abdurrahman Wahid specifically instructed you to do
four things: eradicate corruption and collusion in the company;
improve Pertamina's efficiency; expand the company's production
capacity; and make Pertamina an internationally competitive oil
company. Based on the given time frame, your assignment could be
elaborated as follows:

Short term: Maybe in one or two years you will be able to
eradicate corruption and collusion, at the same time improving
efficiency.

Middle term: Over two years from now, you must expand
Pertamina's production capacity.

Long term: I believe it will take more than five years, and if
you are still in your position then we can see whether you
accomplished the goal, to make Pertamina an internationally
competitive oil company.

As a newcomer to Pertamina's board, you are free of corruption
and collusion. Therefore, you do not face any constraints in
taking resolute steps in regard to Pertamina's personnel. Success
in the short term will greatly help you accomplish your middle
and long-term tasks.

As regards to efficiency, I would like to suggest you give an
extra effort for PSC companies' cost recovery. In the year 2000,
the budget figure will be around US$2.5 billion. Using an
exchange rate of Rp 7,000 per dollar, the amount equals Rp 17.5
trillion. If PSC companies could improve their efficiency by 10
percent, and I am sure they could, we would get additional
revenue of Rp 1.7 trillion.

M. SULHAN ASKANDAR

Jakarta