Monopoly is hard to accept in the globalization era: Purnomo Yusgiantoro

New Minister of Energy and Mineral Resources Purnomo Yusgiantoro vows to restructure the country's oil, mining and power industry in anticipation of the free market in the globalization era. He says "We are facing the era of globalization and transparency, where monopoly is hard to accept for the wild market."

Born on June 16, 1951 in the Central Java's capital of Semarang, Purnomo already has a lot of experiences in the country's oil and mining industry.

He was an expert staff to former Minister of Mines and Energy IB Sudjana from 1993 and 1998, during which he also acted as the Indonesian OPEC governor as well as head of domestic marketing at the Board of Commissioners of state oil and gas company Pertamina.

During the period, he was also involved in the drafting of the new oil and gas law which aims at lifting the decade-long monopoly right of Pertamina on the country's oil industry. But, the administration of President Soeharto failed to submit the draft bill to the House of Representatives due to the strong lobbies from Pertamina.

Purnomo lost job at the ministry after Kuntoro Mangkusubroto took over from Sudjana in 1998 but the administration of President BJ Habibie later appointed him as vice governor of the National Resilience Institute (Lemhanas), a military think tank.

Purnomo graduated from the prestigious Institute Technology of Bandung in West Java in 1974, where he received a scholarship from French oil and gas company Total Indonesie. He then pursued his study at the Colorado School of Mines in Golden, Colorado, the United States, where he received a doctoral degree and did a brief teaching job until 1989.

He has three children. His oldest son Lucky Agung Yusgiantoro received the Presidential Award from the U.S President Ronald Reagan for his achievement during study at the U.S high school, while the second son Inka Brahmanto Yusgiantoro received the same award from President George Bush.

Purnomo is a Catholic.

Following are the excerpts of Petromindo.Com's brief interview with the minister Friday morning at his residence in South Jakarta prior to his departure to Bali.

Question: Many people are now demanding review of the mining contracts of work signed by the previous government, saying among others that the contracts unfairly bring small benefits to the Indonesian people. There are also claims that the contracts were awarded through corruption, collusion and nepotistic practices. What's your comment?

Answer: I will be in charge tomorrow. I will study the contracts, I mean the contracts of work, in view of the allegations by the public that the contracts should be reviewed. This does not mean that we shall change (the contracts). We want to see whether we have to follow the public's demand for the review of the contracts. We have to talk first with friends at the ministry because thus far I have not yet met with my director generals.

Although I have been in this sector for 25 years, I still have to talk with people in the ministry because cases are sometimes complicated from the operational point of view. I will sit together with my director generals. But it is an important information that there is a demand for the review of the contracts. Although (the terms of the contracts of work) have continually been improved, still there may some things that can be perfected.

Question: How's about Pertamina. What are you going to do to improve the performance of the state company?

Answer: Pertamina has been long conducting a corporate restructuring. That's the preliminary information I obtained, including from the press. In connection with the Pertamina Law No. 8/1971, I have been informed that (the draft bill to replace law) has been completed and been sent to the Ministry of Law and Legislation before being passed on to the President and the House of Representatives (for approval).

For your information, I was in the steering committee for the drafting of the oil and gas law in the during the Fifth Five Year State Development Period of 1987/1988-1992/1993 and the Sixth Five Year Development period of 1993/1994-1998/1999.

What I will do is sit together with director general of oil and gas. I will try to hear from them what the draft bill looks like.

As for myself, I want to make Pertamina a world-class company. But this needs a process. (Malaysian oil and gas firm) Petronas used to learn from us that it now becomes a world-class company. We are not yet. We need to sit together with Pertamina and other member of the community on how to realize this.

Question: What will be your policy regarding OPEC? Do you think OPEC countries needed to increase the output now to curb the oil price?

Answer: As far as I know OPEC has set its top and base ceiling prices between US$22 and $28 per barrel. That means if the price is above $28 but quickly decreases, that is only a spike. If the price continues hovering above $28, that means the demand is very strong and output should be increased to force the price back to the $22-$28 range.

The same scheme applies to the opposite case. If the price drops to below $22, what's the matter? If it is because of oversupply, we have to cut the supply because OPEC has already made a commitment to maintain oil price to between $22 and $28.

In one meeting, OPEC agreed that if the price hovers above $28 for 22 consecutive days, headquarters may ask members to cut production.

Question: What will be the main policies of your office?

Answer: Of course, we have to implement clean government, good governance. For sure, that is our main agenda and priority.

Besides, there are also other substances that we have to follow up, that is:

First, the mines and energy sector will support the Cabinet's economic team especially in macro-economic stability. The mines and energy sector is tightly linked with the state budget in terms of revenue and expenditure or subsidy. So, we shall see. Then, in connection of the balance of payment, what is the balance of payment? First, our export of mines and energy commodities, then capital inflow. Thus, through investment, we want to help stabilize the macro-economy.

Second, we shall restructure our policies, including the oil and gas law, the electricity law, the mining law. We have to revise them. They are already 20 years old. In fact, we are facing the globalization, the era of transparency, where monopoly is hard to accept for wild market.

Third, Community development which is connected with the security in the mining areas of KPC (Kaltim Prima Coal in East Kalimantan), Newmont (in North Sulawesi and West Nusa Tenggara) and (Freeport Indonesia) in Timika (Irian Jaya) should be properly handled. But it is not exactly the task of the Ministry of Mineral Resources and Energy. We have to coordinate with related departments, because we can't handle it ourselves. Thus in the football game, this is called total football. (--George Blunt--)