Thu, 15 Jun 2006

Pertamina given two years to perform

Tony Hotland, The Jakarta Post, Jakarta

President Susilo Bambang Yudhoyono has given state oil and gas company PT Pertamina two years to revamp its operations and transform itself into a profitable company, promising that the government would provide maximum assistance, including financing.

Speaking Wednesday, the President said he also expected Pertamina's management to be free of corruption and collusion within two years. These two practices have become well established in the firm, which remains a cash cow for those in power.

"Although there have been some improvements in the management, most of the problems still have to be addressed intensively, including the mind-set, culture and values that Pertamina must have to become a world-class oil company," he said.

The first Indonesian president to visit Pertamina's head office in Jakarta, Yudhoyono was attending a public announcement by the oil company on its plans to revamp its operations and problems it expected to encounter.

Yudhoyono shook up Pertamina's management earlier this year as part of efforts to boost the firm's performance and ability to compete on the global stage.

The replacement of some of the company's top officials was seen as evidence that corruption remains a serious problem at Pertamina.

Yudhoyono said the government fully supported Pertamina in cooperating with foreign business entities to turn the company into a commercially profitable enterprise.

"From what I just heard from Pertamina, I see that the steps they are taking are real. The lack of capital and technology we have can be made up for with capital and technology from foreign companies, which we can use for our own benefit," he said.

Pertamina, said Yudhoyono, is now auditing its capital and assets, which will give the government a clearer picture of its financial position.

Its assets are being calculated to see if the firm is making progress and developing healthily, and to determine whether the taxes and foreign exchange Pertamina has been contributing to the state are appropriate, he said.

In upgrading and extending Pertamina's business, Yudhoyono said the government was providing it opportunities to develop business ventures in local and foreign markets, including cooperating with other oil firms.

"We hear that Pertamina needs a capital injection to develop its business, be it joint investments or some other form. The government will provide support so that all kinds of cooperation can be carried out," the President said.

Yudhoyono said there were still many oil fields in the country that could be explored by Pertamina as part of efforts to turn Indonesia back into a net oil exporter, while at the same time maintaining supplies for the domestic market.

"Now with competition from Petronas and Shell here, Pertamina should be able to compete by providing cheaper, better and faster service to the public," he said.