Leadership conflict leads to dismissal of top Pertamina officials

Conflict between two top officials of state-owned oil and gas firm PT Pertamina has prompted the government to dismiss on Friday the company?s president director Dwi Soetjipto and vice president director Ahmad Bambang.

?There was no chemistry (between the two), there was no teamwork,? said President Commissioner of Pertamina Tanri Abeng, adding that the government will appoint a new president director within 30 days. In the meantime, Pertamina is led by acting president director Yenni Andayani, who is also director of gas and renewable energy at the company.

He said that the leadership conflict will put at risk Pertamina?s various large projects including planned development of new oil refineries and expansion of existing refineries, as well as efforts to find new reserves overseas to help ensure future security of energy for the country.

Dwi, having been successful in leading state-owned cement maker PT Semen Gresik and merging it with two other state cement firms to create a giant PT Semen Indonesia and turned it into a multinational company through overseas acquisition, was appointed as Pertamina president director in November 2014 despite criticism of his lack of experience in the oil and gas sector.

In October of last year, State Minister of State-Owned Enterprises Rini Soemarno, amid rumors of rivalry with Dwi at the time, introduced a new post of vice president director in the management structure of the company to help realize various ambitious projects. Ahmad Bambang, who has a long-career at Pertamina, was appointed into the new post, giving the former Pertamina marketing director similar authority to that of the president director. Rini said on Friday that international consultants hired by the company?s board of commissioners made similar recommendations for dual leadership of Pertamina.

But it turns out that the two captains of Pertamina have been engaged in leadership conflict, causing delays in a number of key decisions and undermining the progress of the company?s various key projects, Tanri said. The government on Friday also decided to drop the vice president director position from the Pertamina management structure.

Among of evidences of rivalry between the two Pertamina leaders can be seen from Bambang?s decision in December of last year to import automotive diesel without approval from Dwi. The leadership infighting has also caused delays in the appointment of 20 strategic positions at Pertamina and its subsidiaries. A decision by Pertamina to raise the price of non-subsidized fuel products on January 5, 2017 is said to have been opposed by Dwi.

Meanwhile, several names emerged on Friday as candidates for the new Pertamian president director including Yenni Andayani, Pertamina Upstream Director Syamsu Alam, Pertamina Director of Processing and Petrochemical Megaproject Rachmad Hardadi, and former president director state-controlled Bank Mandiri Budi Gunadi Sadikin.

Rini said that the Pertamina board of commissioners will propose several names from within the company, which will then be assessed by an independent team before submitting the list to President Joko Widodo.

Editing by Reiner Simanjuntak