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Pertamina set for restructure
The government has ordered state-owned energy giant Pertamina to scrap its gas business directorate prior to its transformation into a holding company, while also expanding its marketing directorate into three divisions to make it more customer oriented
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he government has ordered state-owned energy giant Pertamina to scrap its gas business directorate prior to its transformation into a holding company, while also expanding its marketing directorate into three divisions to make it more customer oriented.
The government plans to transfer its 57 percent stake in state-owned gas firm Perusahaan Gas Negara (PGN) to Pertamina by March at the latest, as part of the move to transform the latter into an oil and gas holding company.
Under the restructure, PGN will be consolidated with Pertamina’s gas subsidiary PT Pertamina Gas (Pertagas). PGN will then serve as the subholding firm overseeing the midstream to downstream gas business.
“That’s why we decided to scrap Pertamina’s gas business directorate as it will be handled by the subholding firm [PGN],” Fajar Harry Sampurno, State-Owned Enterprises Ministry’s undersecretary for mining, strategic industries and media affairs, said on Tuesday.
Consequently, he said, Pertamina’s current gas and renewable energy director Yenni Andayani would be dismissed.
The consolidation with Pertagas will increase PGN’s total assets by 27.5 percent to US$8.7 billion, according to the two companies’ 2016 financial reports. Their combined downstream gas pipelines span 9,520 kilometers as of 2017.
Furthermore, Pertamina’s current marketing division will be expanded into three new directorates, namely the corporate marketing, retail marketing and supply chain, logistics and infrastructure directorate.
As a result, Pertamina’s current marketing director Muchamad Iskandar will manage the first two of the three new directorates. Meanwhile, the company’s current human resources development director Nike Widyawati will temporarily head the supply chain, logistics and infrastructure directorate, where she will also take care of the renewable energy business.
Fajar said the restructure was triggered by a scarcity of subsidized 3-kilogram liquefied petroleum gas (LPG) canisters and some types of fuel, the under supply of which had sporadically hit many parts of the country at a time when demand continued to increase.
With the new supply chain, logistics and infrastructure directorate, he expected Pertamina could strengthen its fuel and LPG distribution networks.
Pertamina’s fuel sales reached 49.79 million kiloliters between January and September 2017, up 5 percent year-on-year (yoy). At the same time, its LPG sales stood at 5.36 million metric tons, up 6.7 percent annually.
Pertamina president commissioner Tanri Abeng also said the restructure was needed so that the company could adjust to changing times.
“Within the past 60 years, Pertamina has always adopted a product oriented approach. But now, because the world and the market have changed, it needs to be more market driven,” Tanri said.
Nonetheless, Fajar said the new retail marketing directorate would later be discarded and be taken over by one of Pertamina’s subholding firms after the company’s transformation into a holding company.
Pertamina previously stated it will setup at least four subholding firms under the holding scheme, each of which will oversee upstream, refinery and petrochemicals, retail and gas.
Fajar then expected Pertamina to formulate and propose the detailed restructuring plan, including in terms of new business processes and the reallocation of human capital, to the State-Owned Enterprises Ministry within the next two weeks to comply with the mandate.
Throughout 2017, Pertamina’s revenues climbed 17 percent year-on-year to $42.86 billion. Nonetheless, its net income fell by 24 percent to $2.41 billion, driven by a 26 percent increase in its cost of goods sold and operating expenses in the wake of the government’s decision to maintain the prices of Premium gasoline and subsidized Solar diesel.
Pertamina has allocated $5.59 billion in capital expenditure this year, up 55 percent. About 59 percent of the figure will be used to support its upstream business activities, including to develop the newly acquired Mahakam block in East Kalimantan and the Jambaran-Tiung Biru field in East Java.
