Pertamina CEO to be replaced: Report

Pertamina CEO to be replaced: Report

A'an Suryana, The Jakarta Post, Jakarta

The government will replace Pertamina president Baihaki Hakim
with Gatot Karyoso Wirayuda, a former upstream director at the
company, according to a report.

Rumors that Baihaki will be replaced have been swirling over
the past year, since the former president of PT Caltex Pacific
Indonesia undertook a major reform program to boost efficiency
and turn the state-owned oil and gas firm into a world-class
company.

Pertamina has been treated as cash cow by politicians and
influential businessmen for much of its history.

"We have not been informed yet about any decision," Pertamina
spokesman Ridwan Nyak Baik told The Jakarta Post on Monday when
asked about Baihaki'r replacement.

But the Kontan economic weekly reported in its latest edition
that the decision was taken during a meeting between President
Megawati Soekarnoputri and Pertamina's board of commissioners,
which includes five ministers.

The report did not say when the decision would become
effective.

It is still unclear why Baihaki will be replaced. But
according to one theory, businesspeople who stand to lose
profitable rent-seeking businesses in the reform drive launched
by Baihaki have been lobbying for the change.

Another possibility is that Megawati simply is not comfortable
with Baihaki, who was appointed in 2000 by then president
Abdurrahman Wahid.

Kontan reported that State Minister for National Development
Planning Kwik Kian Gie was the only member of Pertamina's board
of commissioners who wanted Baihaki to maintain his job.

But, according to the magazine, Kwik backed down and
acknowledged that reshuffling Pertamina's top official was the
prerogative of the President.

The magazine reported that there were three candidates to
replace Baihaki at Pertamina. Aside from Gatot, there was Iin
Arifin Takyan, the current upstream director at Pertamina, and
Roes Aryawijaya, a deputy at the Office of State Minister for
State Enterprises.

Iin was backed by Minister of Energy and Mineral Resources
Purnomo Yusgiantoro, while Roes was backed by State Minister for
State Enterprises Laksamana Sukardi. But in the end Megawati
reportedly felt more comfortable with Gatot.

The big question is, if and when Gatot assumes the top post at
Pertamina, will he continue the reform drive began by Baihaki.

Oil brokers who supply Pertamina with its international crude
needs may have been unhappy with Baihaki's plans to lessen the
role of the traders by moving Pertamina to purchase the crude
directly from the spot market, which was one part of his
efficiency program.

Meanwhile, a senior official at Pertamina who asked not to be
identified expressed regret over the rumored replacement of
Baihaki.

"Baihaki has brought positive changes to Pertamina. It will be
a huge loss for Pertamina if he is finally replaced," the
official said.

According to the official, Baihaki has made Pertamina more
efficient and more financially sound.

Baihaki also has established good corporate governance in the
company, for example, ensuring every tender is carried out
transparently and fairly, the official said.

"If Baihaki is finally replaced, we are afraid that old
practices such as money transfers to powerful political parties
will begin again," said another official.