Lawmaker raises controversy over merger of PGN into Pertamina

Lawmaker Siti Mukaromah advised the government not to rush forming an energy holding company with state-owned PT Pertamina as the parent company.

Ministry of State Enterprises Rini M. Soemarno has proposed the forming of six holding companies for the countrys 140 state companies (BUMNs) for efficiency.

Under the plan, Pertamina is to be the parent company for all state-owned energy companies including Perusahaan Gas Negara (PGN).

The plan to form the energy holding company involving Pertamina and PGN would have big impact on the countrys economy, Siti of the Commission VI of the House of Representatives, said here on Monday.

"Therefore, the government should thoroughly study the plan and has consultation with the parliament first," she said.

There are a number of factors to be taken into account before going any further with the holding company scheme, she said.

"First , PGN is publicly traded company 43 percent owned by the public, while Pertamina is wholly owned by the government.

"There is no guarantee that the idea of holding companies would be acceptable to the investing public. The idea is feared to boomerang on the PGN, which now has good performance with significant contribution to the state income," she said.

The second factor is there has not been a road map on oil and gas management system that it is not known whether the scheme is needed or not, she said.

In addition the Draft Law on BUMN as a revision of the Law no. 19 of 2003 is still in the process of debate at the Commission VI, she said.

"That means there has been no legal basis for BUMN holding companies," she said.

She said the forming of energy holding company has to go over a number of hurdles such as the status of PGN that has to be changed into a non BUMN.

In addition, the scheme has to be consulted with the Parliament as it is to be financed with state state budget fund, she said.

"So far the House of Representatives has not been asked for consultation," she said.

Late last week, former expert staff of Minister of State Enterprises Muhammad Said Didu said "Pertamina very much deserves as a holding company for state energy companies."

Pertamina is healthy financially with significant profit radiating excellent in performance, Didu said, arguing, this year Pertamina is the only state company ranked among 500 elite companies in the world.

Last year, the oil and gas company was already listed among worlds leading companies, he added.

In June 2016, Pertamina reported a net profit of US$1.8 million or a 221 percent rise year-on-year, and it was one of a few oil and gas companies in the world reporting an increase in net profit amid the oil slump.

Rini said all holding companies have to be wholly owned by the government, and they have at least 51 percent of the shares of their subsidiaries.

Source: Antara News