TEMPO.CO, Jakarta - State-owned Enterprises (SOE) Minister Rini Mariani Soemarno should hold back from making maneuvers that can stir up conflicts within Pertamina. Her political interventions are hampering the flagship oil company from progressing to a world-class enterprise.
Rini is currently at odds with Elia Massa Manik, the CEO she appointed herself last year, to muffle board conflicts. As in the previous discords, Rini’s decision to change the job classification was a crux of the disagreement. She eliminated the Gas Directorate and formed two new departments namely Retail Marketing and Logistic, Supply Chain and Infrastructure. A new bloated board was not what Elia envisioned to streamline the company’s structure to increase efficiency.
As the boss of Indonesian state enterprises ministry that holds full ownership Pertamina, Rini does have the authority to fiddle with the management structure. However, four board shake-ups within a year have raised many questions and Rini came across as being reckless in using her authority, even more so when she failed to give a clear explanation for the ‘business reason’ she always used for her reshuffles.
This is not the first time the SOE minister stormed up controversy. In the previous conflicts that resulted in Elia’s appointment, Rini created a vice-CEO position in Pertamina which was filled by Ahmad Bambang. The post created a dual leadership as some of former CEO Dwi Soetjipto’s responsibility was taken over by the deputy CEO. The redundancy only undermined the company’s performance. After much debates, Rini finally erased the new post but also dismissed Dwi from the top seat.
Elia’s appointment as a new chief in March last year was expected to put an end to divisions within the management. Alas, clashes broke out again. The continuing conflict did nothing but pointed to the government’s half-heartedness to grow Pertamina. Political interventions that are not based on business calculations are only detrimental to this company’s growth.
Rini should abandon her plan to reshuffle the top management, particularly if the purpose is to get rid of those who question her decisions. Prolonged conflicts due to interventions will only serve as major stumbling blocks for Pertamina from realizing its big potential of becoming a world-class company.
The unhealthy situation must end much sooner than later as Pertamina is set to be amalgamated with the state gas company, PGN, to become one oil and gas parent company. The new establishment will come into reality once the decision has been made by the finance minister on the value of PGN’s shares to be transferred to Pertamina as equity participation.
If realized, potential capital injection of US$32 billion or around Rp416 trillion Pertamina is poised to receive in the next 15 years must be managed by an able and solid management. Endless internal disputes due to political interventions will only cause losses to the company and ultimately the state. Therefore, President Joko Widodo must order Rini to quickly put a lid on this conflict.
Read the full article in this week's edition of Tempo English Magazine
