SOE Reform Sees Push for Pertamina Revamp

BY :NEIL CHATTERJEE & FATHIYA DAHRUL

JANUARY 19, 2015

Jakarta. Indonesia will overhaul national energy company Pertamina as the government seeks to improve the management of state-owned enterprises and deliver infrastructure projects after slashing fuel subsidies.

A plan for Pertamina to take over oil importing from its offshore trading unit, Petral, will increase domestic oversight of the company’s energy purchases, State-Owned Enterprises Minister Rini Soemarno said in an interview on Friday. The removal of gasoline subsidies at the start of 2015 will also reduce opportunities for irregular transactions, she said.

“We’re not aiming at people, we’re aiming at practices, which have been in play for quite a while,” Rini said in her first interview with international media since being appointed to the cabinet three months ago.

“The system that we’re going to build is very transparent.”

President Joko Widodo came to power last year on pledges to improve the bureaucracy, cut corruption and free up funds to build infrastructure. The revamp of fuel subsidies implemented at the start of this year, which included capping state aid for diesel, will also allow the government to pay for projects including toll roads, railways, ports, power and cement plants this year, Rini said.

“There are going to be quite a few in the next six months,” she said, referring to the projects. State-owned companies will seek to use infrastructure development to aid economic development in remote areas of the archipelago, with the state’s biggest investments to be in power and electricity transmission, she said.

The Pertamina reorganization and the subsidy changes will improve the transparency of oil transactions and help curb what the government has described as an energy “mafia,” the minister said.

Bloomberg

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