Pertamina pushes subsidiaries to go public

JAKARTA. In a bid to speed up the growth of its subsidiaries, state energy firm PT Pertamina said it would push its secondary companies to float shares on the local stock exchange.

Pertamina’s board of commissioners head, Sugiharto, confirmed the policy, saying it was aimed at making those companies more independent.

“One of the ways to encourage these subsidiaries to be independent is to offer an IPO,” said Sugiharto.

He was referring to several of its subsidiaries such as Pertagas, which transmits and distributes natural gas, and Pertamina Drilling Service Indonesia (PDSI), which provides oil and gas drilling to the industry.

Another subsidiary, Nusantara Regas, a joint venture between Pertamina and state-owned gas distributor PT Perusahaan Gas Negara (PGN), is also in talks to become listed.

In February this year, an official with the State-Owned Enterprises Ministry, Dwijanti Tjahjahningsih, was quoted by Antara news agency as saying that Pertamina was pondering the idea of Pertagas and PDSI becoming listed by the end of this year.

The official said that Pertamina was hoping that Pertagas and PDSI could more value to the company as well as its shareholders after both subsidiaries go public.

Sugiharto, however, declined to go on into details regarding the IPO plan, citing that the corporation was still reviewing the assets of the subsidiaries.

The executive also went on to say it was unlikely that Pertamina would let its upstream subsidiaries, namely Pertamina EP, Pertamina Hulu Energi (PHE) and Pertamina Cepu — which holds stakes in the US-based ExxonMobil-operated Cepu block in East Java — to offer IPOs.

“I do not reckon that it would be wise for us to let our upstream units be listed since the government still controls them. Much of the profits will go to non-governmental shareholders if we let them become listed firms and such an act would create conflicts of interest,” he said.

Pertamina, currently the second-largest crude oil producer in Indonesia behind US-based Chevron, booked a record-high Rp 25.89 trillion (US$2.67 billion) in net profits in 2012, up 18.4 percent from a year earlier.

The most bankable state-owned company in the nation, however, was still trailing behind its Malaysian counterpart, Petronas, which, despite having experienced a 14 percent year-on-year profits decline last year, still booked RM 59.1 billion ($19 billion or Rp 185 trillion).

In the past, Pertamina proposed to follow the capital market protocol as a non-listed company to ensure its transparency.

The attempts, however, were rebuffed by the government.

“The Finance Ministry reckoned that under Article 33 of the Constitution on the government’s role over the development of the natural resources, Pertamina should not go public,” Sugiharto said.

Speaking in a discussion during the 37th Indonesian Petroleum Association (IPA) convention over the weekend in Jakarta, Pertamina CEO Galaila Karen Agustiawan said it was unlikely that the firm would enter the capital market as a listed company due to its public service obligations.

“I don’t think investors would be interested [because of the public service obligations]. However, we are currently trying to list several of our subsidiaries instead,” she said.

(Amahl S. Azwar/The Jakarta Post)