Pertamina to lay off up to 40% of its staff next year

JAKARTA (JP): State-owned oil and gas company Pertamina announced on Tuesday that beginning next year it would gradually reduce its workforce by 30 percent to 40 percent in a move to streamline its massive organization.

Pertamina president Baihaki Hakim said Pertamina's employees would be cut to an "ideal" number of 18,000 from the present 26,000 in a retrenchment program that would be carried out within five years.

The retrenchment, he said, was part of Pertamina's restructuring, for which a presidential decree would be issued in the near future.

"So, it's a process of streamlining or downsizing, and the impact is that there will be a reduction of between 30 percent and 40 percent in structural positions," Baihaki told reporters after meeting President Abdurrahman Wahid at the state palace.

He said the President had expressed general approval of the plan, and that Pertamina's new organization could be "launched" in early January.

Baihaki added that there was no rush to reduce the number of employees as about 1,000 retire each year.

Baihaki further assured that employees at Pertamina's head office would not be affected by the policy.

He said he would rely more on the natural retirement process in streamlining the organization, but would welcome any employees' request for early retirement.

"Well, our team is laying out an interesting program, so if they feel they do not have a future with us, they can take early retirement," Baihaki explained.

He also said that he would cut the board of directors from seven to six.

At present, Pertamina's board of director comprises a finance director, a general affairs director, an exploration and production director, a shipping, port and communication director, a processing director, and a distribution director.

Baihaki said the company would combine its different directorates based on upstream and downstream sectors.

The upstream sector covers all oil and gas activities involving exploration, exploitation and production of oil and gas.

While the downstream sector is related to marketing, trade and distribution of oil and gas products.

Based on the plan, he said, Pertamina would combine its shipping, port and communication directory, and its general directory under the trade directory.

"The whole process might take about five years," Baihaki said.

He said that after completing the restructuring, Pertamina's status would be equal to that of any other state company.

"The last stage will be to go public ... maybe after three years we will be ready to go public," he said.

The restructuring of Pertamina, he continued, was different from that of state electricity company PT PLN, where restructuring was based more on its financial difficulties.

"Pertamina is focusing on how to improve its performance, to become more efficient and more competitive," Baihaki explained.

The government hopes to turn Pertamina into a world class oil and gas company, similar to that of its Malaysian counterpart, Petronas.

Pertamina has recently submitted an oil and gas bill to the House of Representatives, under which it would, among other things, lose its monopoly to distribute fuel in the country. (bkm/byg)