TEMPO.CO, Jakarta - The government must exercise prudence when it replaces top executives of state-owned enterprises (SOE), who should be chosen for their performance and their capacity to serve the public and the state. SOEs should not become a stage for political games, or for simply returning favors.
The news that SOE Minister Rini Soemarno fired Pertamina CEO Elia Massa Manik and four other board members through last Friday's extraordinary shareholders meeting came as a shock to many. Massa Manik has been in his position for just 13 months. He was appointed by Rini in October 2016 to quell infighting within Pertamina due to her own policy to give part of CEO Dwi Soetjiptos authority to his deputy Ahmad Bambang.
It is hard to swallow the ministry's rationale that the shakeup was made to smoothen the establishment of a parent company and as a response to the oil spill disaster in Balikpapan. Both pretexts do not properly explain whether any crucial mistakes were committed by the board of directors.
Massa Manik certainly has not scored any outstanding achievements. Under his leadership, Pertamina made a net profit of US$2.4 billion in 2017 versus US$3.2 billion in the previous year. The fuel oil distribution also seemed disorganized as seen from the Premium fuel scarcity in Java, Madura and Bali. Yet, to be fair, it should be noted that Massa Manik is not solely responsible for Pertamina's deteriorating performance. The latter could also be attributed to the government's decision not to raise Premium and solar prices when world oil prices went up.
For political reasons, the government asked not to increase the Premium price until 2019. To put the lid on losses, Pertamina then reduced the Premium supply to Java, Madura and Bali which in fact is not prohibited by regulations.
But now Massa Manik has been kicked out. If this were based on political considerations, how and when can Pertamina advance into being a world-class corporation on par with our neighboring country`s Petronas?
At the same time, the government is also poised to replace Bulog Chief Djarot Kusumayakti, who headed the agency since June 2015. Tough discussions reportedly went on as Trade Minister Enggartiasto Lukita was adamant to keep Djarot. Oddly, Djarot's successor is Budi Waseso, a retired police general without any expertise in logistics. As usual, SOE Minister Rini Soemarno shies away from the media every time a reshuffle is brewing in one of the SOEs.
Not many understand what goes on in the mind of Minister Rini. The government certainly has the 100 percent ownership of Pertamina, meaning that Minister Rini has the full authority to reshuffle officials in all its SOEs. But this authority must be exercised prudently. SOEs are corporations that should be run efficiently for the sake of the nation and the people, not as an arena to flex political muscles.
Minister Rini should refer to article 1 of the SOE ministerial regulation PER-03/MBU/ 02/2015, the regulation she made herself. All appointments and dismissals of SOE boards of directors must adhere to the principle of good corporate governance, not political interests. Frequent replacement of directors indeed disrupts SOEs operations. It is time to put an end to handing out important positions to close allies.
Read the full article in this week's edition of Tempo English Magazine
