Thousands of people, mostly wearing a white shirt and red headband gather around Medan Merdeka Selatan, Jakarta on Friday morning (Jul 20). They are Pertamina workers who held a massive demonstration as a response to the current state of the company. Pertamina is an Indonesia state-owned oil and gas corporation that currently reported will sell 100% assets to strengthen its finances.
The six demands
In the protest, there were six demands submitted by the workers. The first is to reject the sale of assets of Pertamina. The second is to demand that the board of directors responsible for the sale of this asset is to be removed. This policy is considered to improve financial performance because it solves the root of the problems that make Pertamina worse.
Thirdly, to cancel the Conditional Sale and Purchase Agreement between Pertamina and PT Perusahaan Gas Negara (Persero) Tbk (PGN). This agreement is part of the acquisition of PGN to Pertamina Gas (Pertagas), Pertamina's subsidiary of 51 percent.
The acquisition scheme is considered to have been erroneous and tarnished the Oil Holding goal that wants the efficiency of both companies. Therefore, the acquisition caused Pertagas revenue that has been completely for the country, forced to switch some to the public. This is because 43 percent of PGN's shares are held by the public.
In addition, the acquisition process is also considered wrong because it was done when the position of Pertamina and Pertagas President Director was empty. Practically, the acquisition process is only done by temporary officials.
Fifth, the workers also demanded that the Gas Directorate be re-activated. This directorate was disbanded because of the action of Oil and Gas Holding between Pertamina and PGN. In fact, this directorate is considered to be a driver in Pertamina's future business in the gas sector.
Sixth, they demanded downsized Pertamina directors. Currently, Pertamina has at least 10 directors with one person serving as Managing Director of Duties Nicke Widyawati. The workers assess the number of directors is too fat and should be downsized.
Minister of SOE’s Letter
Previously, it was reported that there a circulated letter about the sale of assets of Pertamina. The letter concerning the approval of the principles of corporate action to maintain financial condition of Pertamina dated June 29, 2018. Based on the letter circulated, there are four corporate actions that Pertamina will take, including selling its assets to private parties. This letter was signed by Minister of State-Owned Enterprises (SOE) Rini Soemarno.
Pertamina plans to share down selective upstream assets (including but not limited to participating interest, ownership shares and other forms) while maintaining Pertamina's control of strategic assets and seeking credible partners and striving for other strategic values, such as access to upstream assets in other countries.
Second, spin off the business of RU IV Cilacap and RU V Balikpapan Business Unit to subsidiaries and potential partner farm in subsidiaries in line with the Refinery Development Master Plan (RDMP). Third, Pertamina also proposed additional investments in order to expand the network to sell general fuel at an economic price, such as Pertashop. The last proposal is a review of company policies that can have significant financial impacts by not reducing the essence of the original goal.
Ministry of State-Own Enterprise (BUMN) Rini Soemarno conveyed no decision and approval from her about the sale of the asset. Rini asserted that the circulated letter is a response from a letter proposed by Pertamina to the government which is still in the form of a principle permit, namely licensing the shareholders to review Pertamina's strategic corporate action plans.
"Please read my letter. In the letter, I say please review the possibility of down share corporate action on Pertamina's WK (Work Area) I also emphasize that the control must remain in Pertamina," Rini said when meeting with protesters as quoted by Liputan6.com.
Therefore, in his letter, Rini firmly requested that Pertamina deeply and comprehensively review with the Board of Commissioners to propose the best options which will be submitted through the GMS mechanism in accordance with the prevailing provisions.
There is no "asset sale" in the letter. Instead, Rini asked Pertamina to maintain strategic assets upstream by becoming the control holder. Rini ensures it will always focus to try to make healthy state finances, so strong for a long time. "Pertamina must be healthy for the next 100 years, for our children and grandchildren," said Rini.
Based on Rini statements, Pertamina's proposed corporate action plan to the government provides an opportunity for Pertamina to invite strategic partners who have advantages in technology and business in the energy field. By holding the right business partners, Pertamina can also get added value, both in terms of technology, market expansion and business networking.
Pertamina which is currently the parent of state-owned oil and gas is 100 percent state-owned so must be supported together in order to be an agent of development that can provide the greatest benefit for the people, nation and state.
The corporate actions are reasonable
However, some people and an economic analyst said the selling assets and the other corporate action of Pertamina are considered reasonable.
UGM Energy Economics Observer Fahmy Radhi said that PT Pertamina (Persero) cooperative action to strengthen the financial side of the company in the oil and gas business is a natural and appropriate thing. In the oil and gas industry business is included in the spin-off category and is not part of the release let alone the sale of assets to other parties (private).
"What should be understood there is a difference between privatization and spin-off. Privatization is releasing and sell all the assets to a certain party without the right of ownership. Meanwhile, what Pertamina does is a spin-off, looking for investment partners. This is very natural in oil and gas business," said Fahmy as quoted by Okezone.com.
The Pertamina’s spin-off at this time considered will have two positive effects on the state oil and gas company. Firstly, there will be fresh funds obtained from the cooperation. Secondly, to strengthen Pertamina's finances in the future for the next business.
Fahmy dismissed allegations that Pertamina's corporate action was caused by the loss of the SOE. In fact, Fahmy said, until the first semester of 2018 Pertamina's financial data is still stable and profitable.
Nevertheless, Fahmy suggested that supervision of the spin-off business system needs to be tightened. To ensure achieving the financial goals expected by Pertamina.
Fahmy argues, the spin-off issue made Pertamina eventually become a political commodity. This is because the current political year condition made concerns anything related to the government is used by certain several parties to lead public opinion.
Sources: bisnis.tempo.co, finance.detik.com, liputan6.com, cnnindonesia.com, economy.okezone.com