The State-owned Enterprises Ministry as sole shareholder has dismissed four senior executives — including the CEO — of PT Pertamina Geothermal Energy (PGE) due to poor performance by the company’s board of executives.
The minister, Dahlan Iskan, said on Tuesday that he had asked PGE president director Slamet Riyadi, planning and development director Zainal Ilmie Bachrun, operations director M. Irhas and finance director Narendra to quit their jobs.
The four executives, according to Dahlan, had been “slow” and “disappointing” in leading the company, highlighting the stalled development of the Sarulla geothermal power plant in North Sumatra as a key example.
In general, he said, PGE, a subsidiary of state-owned oil and gas company Pertamina, had failed to meet the expectations of constructing geothermal-fired power plants in Indonesia.
“All in all, the four directors have failed to expand the potential of Pertamina’s geothermal power plants because they were too slow making decisions,” he told The Jakarta Post via text message.
Setbacks surrounding the Sarulla project began in 1993 with major issues surfacing regarding its shares and contract ownership in the geothermal power plant, which will have a capacity of 3x110 megawatts (MW), making it one of the largest geothermal plants in Asia.
US-based Unocal North Sumatra Geothermal Ltd. previously held the contract to develop the Sarulla project under a joint operation contract (JOC) with Pertamina, before Unocal was suspended in 1997.
In 2004, PT Geodipa Energy, a joint venture between Pertamina and state electricity firm PT PLN, were selected to lead the
Sarulla project but in the following few years, its bidding was terminated after disagreements over the contract.
In 2007, the Sarulla assets previously belonging to Pertamina were granted to a private player, Sarulla Operation Limited.
Medco Power Indonesia, which is 49 percent owned by publicly listed Medco Energy (MEDC), holds a 37.25 percent participating interest in Sarulla Operation Limited.
Medco Power’s partners in the consortium include US-based Ormat (2.75 percent); Japan’s Itochu (25 percent); and Japan’s Kyushu Electric (25 percent).
To date, the JOC between the consortium and PGE as well as the energy sales contract between Sarulla Operation Limited and PLN have yet to be concluded.
PGE is still demanding incentives from the government for its assets in Sarulla, delaying the discussions as the request is still being reviewed by the Finance Ministry.
Separately, PGE corporate secretary Adiatma Sardjito confirmed that Slamet Riyadi had been fired at a shareholders meeting on Feb. 22 this year, while the other three executives were relieved of their positions at a shareholders meeting on March 11.
“Currently, Pertamina’s upstream director, M Husein, also chief commissioner of PGE, has the duty of leading the company,” Adiatma said in a telephone interview. Commenting on this, Dahlan said that he would let Pertamina, as PGE’s parent company, make the decision over a new director for its subsidiary, but urged them to find “new blood” that would accelerate the company’s performance.
Established in 2006, Pertamina Geothermal currently operates 14 geothermal working areas, of which nine are operated by the company alone, while the other five are run through the JOC mechanism.
Energy and Mineral Resources Ministry data shows that of the 1,341 MW of steam power from geothermal-fired plants in Indonesia, more than half comes from plants operated by the state-owned company.
However, Southeast Asia’s largest economy can only utilize 5 percent of its total geothermal reserves, meaning the country is still struggling to boost electricity production from this renewable resource, while remaining heavily reliant on fossil fuels for the generation of electricity.
Indonesia is surrounded by a number of tectonic plates that possess 40 percent of the world’s total geothermal reserves containing a potential 29,000 megawatts (MW) scattered across 276 locations.
All the former directors of PGE declined to comment regarding their dismissals.