Purnomo dismisses fears new oil, gas bill to dwarf Pertamina

Minister of Energy and Mineral Resources dismissed fears that the new oil and gas bill would dwarf the future role and business size of state-owned oil and gas company Pertamina.

?There has been some misunderstanding on the concept of the oil and gas bill,? Purnomo said.

The bill, currently being debated by the House of Representatives, is designed to liberalize the country?s oil and gas industry and boost efficiency. This is the second bill proposed by the government after it failed with the first in 1989 during the administration of B.J. Habibie. The current administration expects the House to approve the bill next month.

However, there has been growing criticism toward the oil and gas bill. Critics, for instance, said that the bill would lead to the dismantling Pertamina?s business units because the bill stipulated that companies operating in upstream sector could not enter the downstream sector.

But Purnomo said that the stipulation was mainly a consequence of the new regional autonomy, in which regions would not want financial report of companies operation in their respective areas to be consolidated.

?They would not want the profit of the company operating in their areas to be offset with the company?s loss in other region,? Purnomo said.

?But that does not mean dismantling Pertamina?s business units. This can be solved by forming a holding company with subsidiaries that operate on specific area and specific activity,? he said, adding that it was a common practice in the industry now as implemented by ExxonMobil Indonesia, which is a separate business entity from ExxonMobil Inc. or ExxonMobil Cepu.

?This kind of arrangement would make each Pertamina?s SBUs to become efficient, and thus could deliver best price to customers,? Purnomo said.

He also dismissed fear that the oil and gas bill would force Pertamina to sell off its assets in order to avoid violating the anti-monopoly law. He pointed out as example the state-owned electricity company PLN which has been able to maintain its monopoly status.

According experts, the new oil and gas bill would transfer Pertamina become a limited liability company that is also subject to the anti-monopoly law.(Alex)