Indonesia A Step Closer in Making Pertamina the Oil & Gas Holding Firm
The government of Indonesia is now one step further in turning fully state-owned energy company Pertamina into an oil & gas holding firm. Indonesian President Joko Widodo signed Government Regulation No. 6/2018 on the Formation of a State-Owned Oil & Gas Holding Firm thus formalizing the government's decision to move its 57 percent stake (Series B shares) in gas distributor Perusahaan Gas Negara to Pertamina.
Despite the transfer of shares, the state can still conduct supervision on Perusahaan Gas Negara (PGN) through its Series A shares. These shares give the state the right to veto any of PGN's corporate actions.
Fajar Harry Sampurno, Deputy for Mining, Strategic Industries and Media at Indonesia's State-Owned Enterprise Ministry, said it is now up to the Finance Ministry to determine the value of the shares that are transferred. This decision is expected to be taken within the next two weeks. Pertamina will also need to hold an extraordinary general shareholders meeting before concluding the transformation. This meeting is expected to be held later this month.
In a later stage there will be four sub-holdings below holding company Pertamina: (1) upstream sub-holding, (2) processing sub-holding, (3) marketing sub-holding, and (4) gas sub-holding. Under this restructuring plan, PGN will be consolidated with Pertamina Gas (also known as Pertagas, a unit of Pertamina) to lead the gas sub-holding. There are now several teams active to smoothen the consolidation process between both companies.
PGN controls approximately 76 percent of Indonesia's downstream gas pipelines by operating 7,435 kilometers of gas transmission and distribution pipelines across the country. Pertagas currently operates 2,085 kilometers of gas transmission pipelines. Earlier, Rini Soemarno, Indonesia's Minister of State-Owned Enterprises said consolidation is required to make state-owned companies more efficient. As an example she said "in some areas there are gas pipelines belonging to PGN and Pertagas being operated side by side. Such products must be merged to boost efficiency."