Pertamina needs world-class CEO to beat competition

Pertamina needs world-class CEO to beat competition

Fitri Wulandari, The Jakarta Post, Jakarta

State oil and gas firm PT Pertamina needs a professional
leader who does not only have extensive experience in the oil and
gas business, but also possesses world-class leadership skills so
as to be see the company safely through the cut-throat competition
that exists in the energy business, legislators said.

Irwan Prayitno of the House of Representatives' Commission
VIII said Pertamina needed a world-class chief executive officer
(CEO) to run the company instead of a bureaucrat.

Pertamina needed a CEO who was progressive in his thinking,
decisive and able to find markets for the company's oil and gas
products, Irwan told The Jakarta Post over the weekend.

Sharing Irwan's view, Emir Moeis, another Commission member,
added that Pertamina's future leader should have a strong
entrepreneurial spirit.

Bureaucrats did not possess this as they were accustomed to
working in an ordered working environment.

"Pertamina needs a leader who is highly creative and dares to
make innovations," he said, adding that such a leader needed to
be able to make decisions quickly in view of the highly
competitive environment in the oil and gas business.

Irwan stressed that Pertamina's future leader should have a
background in the oil and gas business.

Both were commenting on the need to replace top Pertamina
managers as a consequence of the government's decision to turn it
into a limited liability company. A presidential decree on this
was issued in June 2003.

It came after the government decided to liberalize the
country's oil and gas industry, and stripped Pertamina off its
decades-long monopoly with the implementation of Law No. 22/2001
on oil and gas.

Names tipped to replace current Pertamina president director
Baihaki Hakim include deputy minister of state enterprises Roes
Aryawijaya, president of liquefied natural gas firm PT Badak NGL
Harry Poernomo, former Pertamina upstream director Gatot Karyoso
Wiroyudo, director general of oil and gas Iin Arifin Takhyan, and
the current chairman of the Indonesian Bank Restructuring Agency
(IBRA) Syarifuddin Temenggung.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro
is reluctant to say much about the issue. He only said that the
power to appoint Pertamina's future leaders now rested solely
with Minister of State-owned Enterprises Laksamana Sukardi. He
hinted that the reshuffle would take place in November.

Whoever the new leader of Pertamina is, he or she will face
the challenging task of turning what was once labeled "the most
corrupt business in the country" into an efficient company.

The Development Finance Comptroller (BPKP) and
PricewaterhouseCoopers found hundreds of irregularities worth
trillions of rupiah in the company in the past. A number of
Pertamina's directors were also brought to trial for corruption
in the past.

The corruption was perpetrated by politically well-connected
individuals.

Since 1994, the company has been undergoing restructuring to
improve efficiency, including the institution of an early
retirement program that has reduced the number of the firm's
workers from 46,000 in 1994 to just 27,000 now. It is also been
attempting to develop a new corporate culture.

But more importantly, over the past several years Pertamina
has been trying to resist efforts by the government and political
parties to turn it into their cash cow to be milked for all it
was worth.

Unfortunately, the issues surrounding the future Pertamina's
leader have already shown signs of politicking by the government
officials involved.

Tempo magazine reported that Laksamana, Minister of Finance
Boediono and Purnomo had proposed Roes Aryawijaya to President
Megawati Soekarnoputri. But she had flatly rejected him.

State Secretary Bambang Kesowo was supporting Gatot Karyoso
Wiroyudo, the magazine said. A subsequent report in the Kontan
business weekly said Laksmana was now promoting Syarifuddin
Temenggung for the job.

But the underlying issue is that there are moves afoot to
replace Baihaki Hakim as director. Reports said Baihaki was not
particularly welcome as he was deemed less than cooperative when
it came to collusion.

Baihaki, the former number one in the U.S. oil and gas firm
Caltex Indonesia, is known for its professionalism and honesty.

Baihaki's critics point to what they say are shortcomings in
Pertamina as a sign of Baihaki's failure to run the company
properly. For instance, they blame the steady decline in the
country's oil output on Baihaki's "failed" leadership.

Emir, however, maintained that Baihaki should not be replaced
as he was familiar with the situation in Pertamina and had
notched up some successes in restructuring Pertamina and turning
it into a professionally managed business.

At least, he said, Baihaki should be allowed to lead Pertamina
"during the transition period" from the change in the company's
status until the appointment of a new leader. He did not say how
long this transition period would be.