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Jokowi pledges energy reform, but appoints insider to team
President-elect Joko âJokowiâ Widodo appears to be firm when it comes to reforming the energy sector, particularly through his plans to restructure state oil company Pertamina and to disband Petral â Pertaminaâs overseas trading unit
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resident-elect Joko 'Jokowi' Widodo appears to be firm when it comes to reforming the energy sector, particularly through his plans to restructure state oil company Pertamina and to disband Petral ' Pertamina's overseas trading unit.
The reform-minded leader is also mulling the establishment of a task-force specifically designed to crack down on so-called 'mafias', vested interests within the energy sector.
So far so good. However, the team to discuss the oil and gas mafias will be headed by Ari Soemarno, a long-time player in the energy sector.
Ari, a former president director of Pertamina, is the elder brother of Rini Soemarno, chairperson of Jokowi's transitional team.
'His appointment as the head of the working group was decided long ago. He was appointed because he has the capability,' Rini said of his brother on Tuesday.
Ari's appointment as the head of a team that is tasked with dealing with vested interests in the energy sector has triggered criticism.
'The appointment of Ari shows that Jokowi is being controlled by political parties,' said Ray Rangkuti, director of the Indonesian Civilized Circle (LIMA).
Dani Setiawan of the Anti-Debt Coalition said Jokowi must avoid nepotism in appointing members of his close circle.
Meanwhile, Hasto Kristiyanto, a deputy in Jokowi's transition team, emphasized that the president-elect was committed to revamping Pertamina and disbanding Petral. 'Petral will be frozen and it will be investigated,' he said in a statement on Tuesday. 'Purchases of crude oil and fuel will be conducted by Pertamina and executed in Indonesia.'
Ari is a former president director of Petral, Pertamina's trading arm based in Singapore. It markets Pertamina's crude oil and oil products and helps import crude to meet Indonesia's domestic demand.
Critics say Petral's operations have led to inefficiencies in the industry, inflating the cost of fuel production, leading to higher subsidy spending.
Petral, which started trading for Pertamina in 2009, trades Indonesian as well as foreign crude oil and oil products. Its markets are mostly in the Asia-Pacific region as well as the United States, Europe, the Middle East and Africa.
The Corruption Eradication Commission (KPK) recently received reports over corruption allegations and other illicit practices within Petral. However, Petral has avoided audits by the Supreme Audit Agency (BPK) and KPK investigation because it is registered overseas.
Jokowi has also responded to criticism of Pertamina and has plans to impose major changes on the firm.
'Pertamina will transform into a non-listed public company to improve managerial capability, corporate financial and national human resources,' Hasto said. 'It must be free from political interference.'
Jokowi would also modernize and build new oil refineries, Hasto said. 'Domestic refineries will process the government's portion as well as contractors' portions of crude oil,' he said. 'The next government will use G-to-G [government to government] mechanisms to secure oil and gas imports.'
The operation of the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) will also be completely reviewed.
Lawmaker Effendi Simbolon from Jokowi's Indonesian Democratic Party of Struggle (PDI-P) previously hinted that SKKMigas' disbandment would be carried out some time in January next year.
Once SKKMigas was disbanded, he said, its role and function would be carried out by a business entity under the supervision of the State-Owned Enterprises Ministry.
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