Pertamina?s management faces dismissal threat

The board of directors, including president director Widya Purnama, of state oil and gas company PT Pertamina is facing dismissal threat from the government because it has not yet achieved the targets mentioned in the management contract, the Bisnis Indonesia newspaper reported in its Thursday edition.

The government may replace the entire management in line with the contract.

?If Pertamina?s board of directors are unable to implement the items mentioned in the management contract by December 2004, yes they will be replaced as per state enterprises? rules as well corporate rules,? a deputy to State Minister for State enterprises, Roes Aryawijaya, who is also Pertamina's commissioner, said in Jakarta on Wednesday.

The management contract is an agreement between the board of directors and commissioners (representatives of shareholders) regarding the targets of the company during one year.

Efforts to reach Widya and other directors through telephone failed on Wednesday, the paper reported.

According to Roes, Pertamina?s management has so far implemented just 20 percent of 20 items mentioned in the contract.

One of the points mentioned in the contract was Pertamina must achieve a minimum of 8.9 percent EBITDA (earnings before interest tax, depreciation and amortization)/operational income.

Until the first semester of 2004, according to Roes, Pertamina's EBITDA/operational income is still around 8 percent.

If the management caused losses to Pertamina through their policies, they must pay for it, Roes added.

?I already reminded them several times about the management contract. I will not forget the rules of the game, ? Roes said. (*)