Restructuring program cuts Pertamina's costs
Restructuring program cuts Pertamina's costs
JAKARTA (JP): State-owned oil company Pertamina's restructuring program, which has been accelerated from five years to three years, has helped reduce its operational costs by about Rp 70 billion (US$30.43 million) per year, its president said.
"The restructuring program has also succeeded in eliminating Pertamina's operational losses and lowering its operational costs," Faisal Abda'oe said on Sunday after a ceremony to celebrate the company's 38th anniversary.
Pertamina's has detailed its restructuring program as consisting of efficiency improvement, a reduction in the number of employees and the establishment of profit centers.
Abda'oe said that improved efficiency has improved the company's ability to meet the increasing domestic demand for fuel, which rises seven percent annually.
He explained that Pertamina, under the restructuring program, had shifted the function of its operational units into profit centers that contribute to its revenues.
"Efficiency improvement will help increase Pertamina's profits," Abda'oe said.
He said his company booked a net profit of Rp 29.4 billion in 1994, compared to Rp 26.7 billion in 1993.
He said that although only 30 percent of Pertamina's operations are profit-oriented, the company is able to repay its foreign debts.
About 70 percent of Pertamina's operational activities, under the assignment of the government, are aimed at meeting the needs of the people.
Pertamina, for example, receives a government subsidy if its costs for the domestic distribution of fuel are higher than its sales revenues. In turn, Pertamina is supposed to pass on its profits from fuel sales to the government if the costs are lower than sales revenues.
As for downsizing, Abda'oe would not say if the company had reduced the number of its employees by its target of 15,000.
Last year, Abda'oe told a hearing at the House of Representatives that Pertamina would cut the number of its employees from 46,000 to 31,000 within five years.
Abda'oe said on Sunday that his company had also simplified its bureaucratic procedures to anticipate tougher competition in the free trade and globalization era.(04)