Observers Say There Is A Risk Of Failure To Pay That Haunts Pertamina Due To Salah Financial Governance

Illustration. (Photo: Doc. Antara)

JAKARTA - A number of observers assess that the debt of development of Pertamina's subsidiary risks default following a long-term investment decision financed short term.

Surya Darma's Board of Director of the International Geothermal Association (IGA) said that PT Pertamina Geothermal Energy Tbk (PGEO) investment is a long-term investment. All agreed that the results of the geothermal business investment will not be enjoyed in the next 5-10 years.

He emphasized that PGEO has the risk of default due to the large capital requirement to run a geothermal business. Debt is considered to be one of the pillars so that businesses with an intense capital model like PGEO can survive.

As a result, continued Surya, the company must find a way to increase capital, one of which is through an IPO, where one of the allocations for the use of emissions is to pay debts or refinancing. If you look for additional money, you can invest with an IPO, but it won't be much. So you have to keep in debt," he told reporters, Tuesday, March 14.

Therefore, Surya asked PT Pertamina (Persero) to be aware of a number of risks to the company's bankruptcy threshold history due to expansion in the 70s.

In the company's development, as written in the 2021 company's financial statements, the total debt of oil and gas State-Owned Enterprises (BUMN) reached 19.9 billion US dollars or around Rp. 283.87 trillion (exchange rate of Rp. 14,265 per US dollar) at the end of 2021, equivalent to 14.11 percent of the realization of state revenue in the 2021 State Budget of Rp. 2,011.3 trillion.

Problems arose when the release of a subsidiary's shares, such as the IPO of PT Pertamina Geothermal Energy Tbk (PGEO) which could be a new risk for the company.

"If it is wrong to manage, the state must also swallow the bitter pill," he explained.

Do not let Surya continue, Pertamina's management, which is currently headed by Nicke Widyawati, follow in the footsteps of Ibnu Sutowo, who once made the national oil company on the verge of bankruptcy.

Citing The New York Times published on November 17, 1977, entitled Pertamina: A lesson for World Banking, asserts that the international banking system is almost affected by oil monopoly state bankruptcy.

Pertamina almost triggered a series of defaults on foreign bank loans worth at least US$6.5 billion. At that time, Pertamina was declared unable to pay for it in early 1975. Several banks urged the government to cover the oil company's debt with a tenor of 365 that day.