Pertamina to sell three subsidiaries this year
Fitri Wulandari, Jakarta
State oil and gas firm PT Pertamina announced on Tuesday plans to sell three of its subsidiaries this year to improve its performance.
Pertamina finance director Alfred Rohimone said the companies to be sold are Patra Jasa Hotel, insurance company PT Tugu Pratama and Pelita Air Service. The company has 14 subsidiaries and 16 joint venture companies.
"The companies are deemed unprofitable for Pertamina," Alfred told reporters after a hearing with the House of Representatives Commission VIII overseeing energy and mining.
While he did not provide details about the sales timeframe or scheme, Alfred said Pertamina's board of directors would request approval for the plan from the board of commissioners next month.
The company recently reviewed its assets in view of formulating a new business strategy, following last year's change in status into a limited liability company.
Pertamina, in a report to the House on the review's conclusions, said it would keep only eight of the 14 subsidiaries, merge three and divest the remaining three.
As for joint ventures, it plans to sell eight companies that do not support Pertamina's core business, while the remaining eight will be maintained.
The company will restructure the subsidiaries prior to the sales, and is to appoint a consultant in August to assess their pre- and post-restructuring values.
Elsewhere, Pertamina president Ariffi Nawawi said the company had shortlisted eight foreign companies interested in purchasing its giant oil tankers, or very large crude carriers (VLCCs). The eight will be pared down to three tomorrow.
No local companies were interested in the tankers, presumably due to a lack of finances.
"We want to sell the tankers at rates higher than the market price, which apparently only foreign firms can afford," Ariffi said, while explaining that the eight foreign firms come from European and Asian countries.
Pertamina expects a minimum profit of US$50 million from the sale of the two VLCCs, which will be used for debt repayment and "other purposes", he said.
The VLCCs, each with a capacity for 2 million barrels of crude and a $135 million price tag, are being built by South Korea's Hyundai Heavy Industries.
The vessels were ordered by Pertamina's previous management on the grounds that having its own VLCCs was more efficient than leasing them to transport fuel and crude across the country; however, the current management believes it is cheaper to lease them, in view of the firm's current financial standing.
Pertamina operates 143 tankers, 113 of which are leased and the remaining 30 are self-owned, for transporting fuel and crude.