TEMPO.CO, Jakarta - Pertamina began a new chapter in its history last week with the dissolution of Pertamina Energy Trading Ltd (Petral). But there is no reason to stop there. For too long, the Pertamina subsidiary had been suspected of being awash with 'hot money' from commissions to buy and sell oil. Pertamina's new managing director, Dwi Soetjipto, revealed the extent of the wastage within Petral. Only three months after Pertamina took over the responsibilities of Petral, the state-owned oil company made a profit of US$20 million, or around Rp260 billion. This is why the inefficiencies that have continued for years must be unmasked in their entirety.
It is possible that these inefficiencies were present from the outset, when in 1969 Pertamina established Perta Oil Marketing Corporation, based in Hong Kong and California, to sell Indonesian oil in the United States. During the authoritarian New Order regime, nobody had the courage to 'touch on' the track record of the Perta Group-a joint venture between Perta oil and an American company. The same was true when this company established Pertamina Energy Services Ltd (PES) in Singapore to trade in crude oil, petroleum products and petrochemicals. Since 2001, when PES was tasked with importing crude oil and fuel because Indonesian production was no longer sufficient to meet domestic demand, there have been frequent rumors of 'amazing' commissions and fees, but no investigations.
It is fair to suspect that the Petral monopoly through PES has been a source of funds for the petroleum mafia. This cozy relationship was able to continue because of the collusion between the Petral management and Indonesian government officials and politicians. The influence of the 'hidden hands' protecting Petral is so strong that Pertamina Managing Director Ari Soemarno-older brother of the current minister for state-owned enterprises-lost his job because he suspended Petral and replaced it with the Integrated Supply Chain (ISC) division. This transfer of responsibilities was short-lived: Ari was dismissed and Petral came back to life.
Petral's 'invincibility' meant it continued to thrive during the administration of President Susilo Bambang Yudhoyono. Nothing came of the plan by SOEs Minister Dahlan Iskan to dissolve Petral, despite the minister's repeated visits to the Palace to report on the complaints he had received about the practice of sharing out commissions among certain individuals for every barrel of crude oil traded by Petral. Did Dahlan's plan come to a halt at the desk of his boss? Only God knows. But last week, Dahlan's boss, former president Yudhoyono, denied having protected Petral.
After Petral's dissolution, the buying and selling of crude oil could be managed by the ISC division again. But Pertamina needs to be careful. The ISC is not an immediate guarantee that oil auctions will no longer be free of the petroleum mafia. It is important to remember the purchase of the Zapati crude cocktail in 2008. At that time, Ari Soemarno was Pertamina managing director and Sudirman Said (now minister for energy and mineral resources) was his adviser. The ISC had already been proposed. Following an investigation by this magazine it transpired that there were many irregularities in the auction. Pertamina appeared to have lost around US$6.5 million. Eventually, the National Police detective department named four suspects from Pertamina and the winner of the tender, Gold Manor International, owned by businessman Riza Chalid. But the case subsequently faded away into nothingness.
Only a fool falls into the same hole twice. The dissolution of Petral and its subsidiaries should take place alongside a comprehensive overhaul of Pertamina's oil trading system. This should be the responsibility of Pertamina, the SOEs Ministry and the Energy and Mineral Resources Ministry. These three organizations should be of one view that the most important issue is not only the dissolution of Petral, but also making the buying and selling of crude oil transparent, efficient and open to audit at any time.
Subsequently, Pertamina must put an end to all opportunities for people seeking commissions. The easiest way to do this would be to purchase crude oil without using middlemen. As a major buyer procuring 500,000-600,000 barrels of crude per day, Pertamina could deal directly with the sellers. Clearly the aim would be to obtain the lowest price, and the door for seekers of commission would be closed.
The people are waiting for Pertamina to keep its promise to audit Petral and its subsidiaries before it is liquidated next year. Pertamina, via the SOEs and Energy ministries needs to ensure that this promise is more than mere words. We hope that a forensic audit will uncover all the collusion that has undermined Pertamina and cost the state trillions of rupiah. The administration of Joko Widodo should not hesitate to go after these commission seekers, no matter how senior their ranks or positions in the past. (*)
Read the full story in this week's edition of Tempo English Magazine
