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.