Pertamina demands longer transition period for change

State oil and gas company has asked the government a transition period of seven years to change itself into a limited liability company but the government was only ready to give it two years, a top official of the Ministry of Mines and Energy said.

Director general of oil and gas Rachmat Sudibyo said the issue of transition period remained one of the points on which the ministry and Pertamina still disagreed with each other in the current drafting of the oil and gas bill.

"2003 is our target year (for Pertamina to change itself into a limited liability company). This is in line with the AFTA (ASEAN free trade agreement)," Rachmat was quoted as saying in the latest edition of Kontan weekly.

Rachmat also said during the drafting of the oil and gas bill, the government and Pertamina were still in disagreement over the details of the rights owned by the body to be set up by the government to exercise its oil and gas mining rights.

The government insisted that the mining rights holding body would also serve as a supervision and management body for the oil and gas industry, but Pertamina wanted the supervision and management right remain in the hands of its foreign contractors management body (BPPKA), which is a division of the state company, Rachmat said.

Rachmat said Pertamina was afraid of losing the supervision and management fee payable by oil and gas contractors, which amount to about Rp 3 trillion (US$1=Rp 8,625) annually.

According to Kontan, Pertamina's team walked out of the meeting of oil and gas bill drafting committee in protest against the government's ideas.

The government planned to submit the oil and gas bill to the House of Representatives this month, according to the weekly.

Pertamina's president Baihaki Hakim earlier said during a hearing with the House that Pertamina had been ready to transfer its decades-long controlling rights on the country's oil and gas industry to a body independent from the company and the government. The government awarded the controlling

But, he said, the transfer of rights should be carried out gradually as to avoid unwanted social and political turmoil,

Kontan also said the oil and gas draft bill prepared by the government also stipulated that Pertamina would be split into two companies, which respectively handle the downstream and upstream sectors.

Oil and gas analyst Kurtubi said the oil and gas draft bill clearly took sides with foreign investors at the expense of Pertamina.

He suspected foreign oil and gas companies had pressured the oil and gas bill drafting committee to strip Pertamina of its exclusive rights in the bill, but he said it was difficult to uncover evidences to prove it. (*)