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)