New oil and gas bill will dissolve Pertamina

The new oil and gas bill, that will be presented to the House of Representatives to be passed into law to replace Law No. 8/1971, will dissolve Pertamina and then establish a new oil and gas firm that will be supported by subsidiaries, an expert said on Thursday.

Oil and gas expert Ramses Hutapea said that some of then dissolved Pertamina would be transferred to the new company, some others would be taken over by the government that will then privatize the assets to the public.

The dissolving of Pertamina and the establishment of a new oil company is contained in a draft regulation on transfer of authority to support the oil and gas draft bill. The draft was written in English and now widely available among oil and gas societies abroad.

The dissolving of Pertamina is contained in Article 6 of the draft regulation of the transfer of authority. Article 6 reads: "When assets and authority are transferred to the new state company and its subsidiaries, Pertamina must be dissolved."

The process of dissolving Pertamina must be completed in two years time since the new oil and gas bill is passed into law. Before that, the government would form a steering committee led by the finance minister to audit and evaluate Pertamina's assets. Members of the committee should include ministers of mines and energy, of industry and trade, state minister of investment and state enterprises development and two high ranking officials appointed by the President.

After the audit and inventory of assets, the steering committee must made recommendations to the President on what assets to be transferred to the new company and what assets must be sold to the public.

According to the draft ruling, the new state oil and gas firm must at least get assets to conduct explorations and exploitation of oil and gas, and also assets for production, transportation and marketing of oil and gas.

Ramses said that the government was hiding its motives behind the draft regulation on the transfer of authority. It did not mention the dissolving of Pertamina in the new oil and gas draft bill to camouflage its motive and therefore members of the House of Representatives would not notice it.

He said that the draft regulation, if passed and implemented, would allow foreign companies to control strategic assets in Indonesia.

Besides, the draft regulation was against the government's letter of intent to the International Monetary Fund, in which the government promised to empower Pertamina to become a world-class oil and gas firm.

Ramses suggested that the government maintained the existence of Pertamina and transformed Pertamina into a holding company and then form as many subsidiaries as possible to handle exploration, exploitation of oil and gas, production, distribution and marketing of fuel.

Therefore, Pertamina would do more on coordination and forge cooperation with foreign partners, including financing partners. (*)