Oil and gas bill not to kill Pertamina
Saturday, August 18 2001 - 03:04 AM WIB
Purnomo was quoted by Kompas daily on Saturday (August 18) as saying that the government would set a certain transitional period before opening the industry for direct foreign competition to allow Pertamina and other local oil and gas companies prepare themselves for the competition.
Moreover, Purnomo said Pertamina is a state-owned company and therefore, it is impossible if the government designs its demise.
Later when the bill is passed into law, Pertamina will be paid or get a profit from distribution fuels to various parts of the country.
Currently, Pertamina does not care about the profit in distribution the fuels as it is mandated by the government. If Pertamina collects profits, it will submit the profits to the government, but if Pertamina suffers losses, the government would cover it.
Therefore, Purnomo said what Pertamina should do now was preparing itself for the transition period by looking into its organization, its strength and weaknesses. He called it as a micro transition. Then Pertamina should prepare itself for the competition, which he called it as a macro transition.
When asked on the time frame of the transition period, Purnomo said it needed to be discussed with legislators deliberating the bill. Nevertheless, Purnomo gave a suggestion that a macro transition would need a longer time than micro one. The macro transition could be five years, for instance.
Local oil analysts have warned that the bill, if passed, would effectively kill Pertamina as the company would not be able to compete head to head with giant international oil companies such as BP-Amoco-Arco or ExxonMobil Oil.
Oil expert Kurtubi, for instance, was quoted by Media Indonesia as saying that if the bill is passed into law, Pertamina's days will be numbered.
Under the bill, Pertamina will automatically have to adjust itself into a limited liability company, and it will automatically be subject to the corporate law and anti-monopoly law.
The consequence of this will be that Pertamina will be forced to sell up to 50 percent of its assets, because they are acquired by Pertamina as the monopoly in the oil and gas industry.
if the government and the House of Representatives continue to pass the bill into law, fuel prices would differ from places to places across the country, with the areas closer to the refinery plants getting the cheapest price.
He said no single country in the world open its oil and gas industry totally free to foreign competition. It is also a sector that is excluded by the World Trade Organization from liberalization.
Therefore, rather than producing a totally new oil and gas law, Kurtubi suggested that the government and the House amend Law No. 8/1971 on Pertamina. This way, Pertamina would remain intact and the interest of domestic consumers would be protected. (*)