Planned PGN-Pertagas merger a 'mistake'

JAKARTA. The government is heading toward repeating its Indosat privatization “mistake” in a planned merger between state-owned gas company PGN and Pertamina’s gas subsidiary Pertagas, a public policy expert Agus Pambagio has said.

The merger would be a grave mistake as it would dilute the government’s stake in PGN through a transaction mechanism called inbreng, where stakes are transferred to Pertamina and treated as a capital injection in the form of assets, he added.

Thus, PGN would be a 100 percent private entity under Pertamina, and no longer a state-owned enterprise (SOE). Along with the loss of the state’s ownership, PGN would no longer be closely supervised by the House of Representatives.

“The SOEs Ministry is clever in liquidating its baby, just like how it screwed Indosat […] It’s only a trick that leads to the loss of a state-owned firm. The public must urge the state to be responsible,” Agus said in a statement on Thursday.

He added that the government should resolve the conflicting business scope between PGN and Pertagas by diversifying their duties, while maintaining its stake in PGN. For instance, Pertagas could take charge of the upstream gas business, while PGN could handle downstream business.

“Behind the SOEs Ministry’s clever measures in creating a holding company for the oil and gas business, there is an extra objective, which is adding to Pertamina’s assets to jack up its leverage. Forget about affordable gas for the public,” Agus said. (Arif Gunawan Sulistiyono)