Pertamina outsources asset management

Pertamina outsources asset management

JAKARTA (JP): State oil company Pertamina is inviting private
firms to manage some of its assets in North Sumatra to make its
operations more efficient, an executive said yesterday.

The head of Pertamina's North Sumatra-based Production Unit I,
Warnaedy, told a hearing of the Commission for Economic Affairs
at the province's Legislative Council in Medan that his office
was still inviting foreign and domestic firms to help manage its
hospital, hotel, golf course and other sports facilities.

He explained that his office had assigned Pacific Petroleum
Trading & Co. of Japan to modernize its oil refinery in Pangkalan
Brandan and PT Lamindo Sakti to manage its asphalt production
unit in Pangkalan Susu; both are in North Sumatra.

The refinery, Warnaedy said, could process up to 5,000 barrels
of crude oil a day to produce naphtha, kerosene, diesel oil and
liquefied petroleum gas (LPG).

Warnaedy was quoted by Antara as telling the commission that
private management of the assets was expected to increase
Pertamina's profits.

Survival

"Pertamina's production units are required to operate as
independent profit centers in the company's program to survive in
the era of globalization and free market competition," he said.

He said that Pertamina was asking the community to understand
its changing business orientation, which may affect their
interests.

The government, under the 1945 Constitution, assigned
Pertamina to manage the country's hydrocarbon resources for the
optimal benefit of the people. Based on chapter 33 of the
constitution, all natural resources in the archipelago must be
managed by the state to the best advantage of its people.

Warnaedy said that his office, in line with the new
orientation, would try to give financial assistance to local
administrations and communities for productive purposes, such as
the promotion of partnerships between small and large businesses.

Commission member Syaifuddin suggested that Pertamina maintain
its function as a development agent despite its new business
orientation.

"To improve its profitability, Pertamina should improve its
management, instead of privatizing it assets," he said. (10)