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.