Pertamina allowed to use funds from asset sales for capital

Minister of Energy and Mineral Resources Purnomo Yusgiantoro has made it clear that state owned oil and gas Pertamina would be allowed to use funds generated from the sales of its non-core subsidiaries to increase its capital, Neraca reported on Saturday.

"I want the proceeds from the sale of Pertamina?s assets to be used as capital of the company," he said, adding that gas and oil refinery plants should also remain under the control of the company because they are still part of its core business.

The minister acknowledged that some parties had demanded the transfer of Liquefied Natural Gas (LNG) and oil refinery plants to BP Migas, which is in charge of the country?s upstream industry. Others want these assets to remain under Pertamina.

The minister said that the question related to the government?s request to sell Pertamina?s non-core subsidiaries such as those operate in insurance and transportation was also being heatedly debated.

About the draft of the government?s regulation on the operation of Pertamina as a full business entity, the minister said that it was being completed. "I am optimistic that the draft would be soon completed," he added.

State owned oil and gas company Pertamina earlier said it opposed any plan to privatize its profitable subsidiaries because such companies give a significant contribution to the company?s financial performance.

Pertamina?s spokesman Ridwan Nyak Baik said in Jakarta on Wednesday that the company?s subsidiaries such as PT Pertamina Tongkang and PT Pelita Air Service had given a positive contribution to the oil and gas company?s consolidated profits. (*)