Challenges Ahead for Pertamina chief

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Jakarta-the Jakarta Post. As the decision on Pertamina’s new chief comes to a close, the government has been told to be cautious over the challenges the state-owned oil and gas firm may face going forward as it bears the burden of several crucial tasks.

The State-Owned Enterprises (SOE) Minister recently confirmed that names of several candidates to lead Pertamina have been submitted to President Joko “Jokowi” Widodo.

Institute for Essential Services Reform executive director Fabby Tumiwa warned that Pertamina faces many challenges ahead as a state-owned oil and gas holding company.

“We [..] need to remember that Pertamina is now a state oil and gas holding company,” Fabby told the Jakarta Post on Friday.

“Pertamina will face more challenges especially because its business will need upgrading with this new structure.”

Earlier this year, Pertamina officially transformed into an oil and gas holding company after it received additional state capital injections to serve as legal basis for the government’s plan to transfer its 57 percent stake in gas distributor Perusahaan Gas Negara (PGN) to Pertamina.

Pertamina is currently shouldering at least two populist government policies, namely ensuring the availability of Premium-type gasoline in Java, Madura and Bali, which was previously not an obligation, and implementing the one-price fuel policy across the country.

Fabby pointed out that Pertamina now had the added responsibility of ensuring the successful adaption of the 20 percent blended biodiesel (B20) policy in the non-public service obligation (PSO) sector, which will take effect in September.

During an official visit to Jayapura in Papua on Friday, SOE Minister Rini Soemaryo hinted that Pertamina’s current acting president director, Nicke Widyawati, would helm the company.

“Bu Nicke is a Pertamina official who, Insya Allah [God willing], will be president director of Pertamina,” as she said reported by kompas.com.

However, the ministry under-secretary for mining business, strategic industry and media affairs, Fajar Harry Sampurno, told the Post that no decision had been made.

Similarly, special staffer Wianda Pusponegoro said the selection process was still ongoing, but confirmed that Nicke was among the candidates being considered.

“It is true that Nicke Widyawati is among the candidates the minister offered,” Wianda said in a statement on Friday, without providing further details.

Responding to the news, IESR’s Fabby said that if Nicke was indeed appointed to lead Pertamina, it may be because she was considered to be more accommodative of the government’s agenda and political interests in the oil and gas sector, especially with regards to fuel.

Elia Massa Manik, who was dismissed as Pertamina president director four months ago, had often been at odds with Energy and Mineral Resources Minister Ignatius Jonan over the letter’s repeated insistence that company sacrifice its bottom line to limit price rises and maintain the supply of fuel nationwide in line with Jokowi’s populist economic policies-often criticized as a means of boosting his population ahead of the 2019 presidential election.

As a result of these populist policies, Pertamina lost potential revenue worth around US$2.05 billion last year, leading to a 24 percent annual decrease in its net profit to $ 2.41 billion.

However, Fabby acknowledged Nicke’s extensive experience in state-owned energy company PLN and her brief stint as human resources director at Pertamina.

Therefore, he said, Nicke should provide Pertamina a fresh start as she had not been burdened by the past responsibilities in the company.

“While she may not have a detailed knowledge [of oil and gas] she has known enough to come up with the necessary business decisions,” Fabby added.

Separately, Pertamina spoke perspon Adiatma Sardjito did not confirm nor deny the news and said that the decision was entirely in the hands of the SOE Ministry.

Source: The Jakarta Post