Pertamina may liquidate several subsidiaries

State-owned oil and gas company PT Pertamina may have to liquidate poor performing subsidiaries or affialiate companies particularly if their return on equity (ROE) is below the interest rate of Bank Indonesia certificate, Investor Indonesia newspaper reported in its Tuesday edition.

Pertamina has given them six-month time since its annual general shareholders meeting held on January 28, 2004 to improve their condition.

Deputy to the state minister for state enterprises overseeing mining, strategic industries and telecommunications, Roes Aryawijaya, said Pertamina’s management and shareholders reached an agreement regarding the restructuring of its subsidiaries.

“The subsidiaries must be regrouped, repositioned and revitalized. Later, the outcome of the restructuring will indicate which company needs to be sold or even liquidated," said Roes last week at his office in Jakarta.

Roes said that the restructuring of Pertamina’s subsidiaries will also have an impact on their affiliates. The latter group companies must have ROE, which is higher than the interest rate of Bank Indonesia certificates.

“At present Bank Indonesia certificate interest rate is around 8 percent and the companies whose ROE is below 8 percent will be liquidated,” Roes affirmed.

He also said at present, Pertamina has 12-14 subsidiaries.

Earlier Pertamina’s president director Ariffi Nawawi confirmed that ROE of several subsidiaries is still low at around 7 percent. (*)