30 March 2020 (closed)
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Indonesia’s seventh president Joko Widodo, who will take office on 20 October 2014, wants to conduct several reforms in Indonesia’s energy sector in an attempt to combat illegal practices and optimize state income. Firstly, Joko Widodo, popularly known as Jokowi, plans to audit operations of state-owned Pertamina’s energy trading unit Petral to halt alleged fuel smuggling and corruption. Secondly, Jokowi wants to impose major changes at Pertamina. Lastly, the president-elect wants to curb coal exports to ensure domestic supplies for power plants.
Hasto Kristiyanto, senior member of Jokowi’s transition team, said that operations of Pertamina’s energy trading unit Petral will be temporarily suspended and audited as it has been reported that significant fuel smuggling has been conducted. It is estimated by government officials that five percent of Indonesia’s fuel is smuggled abroad (mostly to Singapore and Malaysia). Earlier this month, four people (including two navy contractors and an official of Pertamina), were arrested for their alleged involvement in fuel smuggling involving millions of US dollars. Petral started trading for Pertamina in 2009 and trades both Indonesian and foreign crude oil with its main markets in the Asia Pacific, USA, and Europe.
Reform in Indonesia’s oil industry is needed as output has been in a state of decline for the past two decades.
Major changes are also expected to affect state-owned energy company Pertamina. Kristiyanto said that Pertamina will be transformed to a non-listed public company to improve managerial capability as well as human resources. The company should also become free from political interference. Pertamina will also be requested to manage expiring energy contracts. Contracts of Exxon Mobil Corp, Total SA, PetroChina Co Ltd, and Chevron Corp will expire during Jokowi’s term (2014-2019).