The IPO Plan For Pertamina's Subsidiary Needs To Be Re-examined

JAKARTA - PT Pertamina (Persero) 's plan to conduct an initial public offering (IPO) for its upstream subsidiary needs to be reviewed. The reason is, this is considered to reduce Pertamina's status as an operator of oil and gas business activities as regulated in the Oil and Gas Law No.22 / 2001 and the BUMN Law No.19 / 2003.

"The IPO plan needs to be reviewed because Pertamina in the upstream area is currently weak compared to open energy companies in other countries such as Petronas, Saudi Aramco and Abu Dhabi National Oil Company," said Komaidi Notonegoro, Executive Director of ReforMiner Institute, as quoted from Antara, Monday, July 27.

According to Komaidi, a number of open energy companies in a number of countries have their mineral control rights attached to the state, which in this case is represented by the government, while Pertamina's position is no different from that of oil and gas contractors in general.

"Pertamina's position here is in line with the production sharing contract (PSC) itself. This study needs to be clarified, because it relates to market capitalization later. The evaluation is how many ways to calculate it at the IPO," said Komaidi.

Meanwhile, President Director of PT Pertamina (Persero) Nicke Widyawati said that the company's restructuring program and the subholding IPO plan did not violate any applicable law. The two policies will actually make Pertamina stronger and bigger, even surpassing world-class oil and gas companies.

"The restructuring and IPO plans are ways for Pertamina to maintain its long-term business, to continue to grow in a sustainable manner," said Nicke.

According to him, Pertamina has made comparisons with global energy companies in corporate restructuring. The basis for Pertamina to carry out strategic planning, namely obtaining recurring income, investing or developing to create new income, while in long-term and sustainable growth it is aimed at future income.

There are three legal bases that underlie the restructuring activities of Holding-subholding and IPO subholding plans, namely article 33 of the 1945 Constitution, Oil and Gas Law No. 22/2001 and the BUMN Law No. 19/2003. Article 33 of the 1945 Law, referring to the Decision of the Constitutional Court, states that being controlled by the state can implement policies and actions of control, regulation, management and supervision for the purpose of the people's welfare.

The Oil and Gas Law does not regulate prohibitions or limit subholding in the upstream and downstream oil and gas sectors to carry out IPO activities. Meanwhile in the BUMN Law, as long as the restructuring does not involve changes in state share ownership in Pertamina and the IPO is carried out in subholding where the state does not have shares in it, then restructuring does not constitute privatization.

Meanwhile, Professor of the Faculty of Law, University of Indonesia, Professor Hikmahanto Juwana, said Pertamina restructuring does not mean selling company assets.

"Please differentiate between Pertamina first based on Law 8 of 1971 and Pertamina now. If previously Pertamina held oil and gas reserves, now it is the operator, the business," he said.

According to Hikmahanto, the state reserves are now in the hands of the state, not by Pertamina. "The state held it, then the government auctioned it off. Previously Pertamina signed on behalf of the state. Now, Pertamina signs on its behalf as the operator," said Hikmahanto.

Pertamina, he continued, had been appointed as the holding for oil and gas. Companies have many options for bringing in fresh funds such as bonds, IPOs, bank loans and others.