President Joko Widodo has summoned three ministers to demand a report on the plan to form a holding firm for state-owned companies Pertamina and gas distributor PGN. Coordinating Minister for the Economy Darmin Nasution, Finance Minister Sri Mulyani, and Minister of State-Owned Enterprises (BUMN) Rini Sumarno were summoned by the head of state. The president also called the head of the government’s Development Finance Controller Ardan Adiperdana.
“The president called on us — coordinating minister, minister of finance, minister of BUMN, and Mr. Ardan Adiperdana — to explain the plan to merge Pertamina and PGN into an oil and gas holding company,” Mulyani noted after meeting the president at the Presidential Palace here on Wednesday.
The finance minister revealed that the president had sought more detailed information related to the business model of the two state-owned oil and gas companies.
“(The president had asked) whether the synergy is able to have a positive outcome, especially in terms of capital expenditure, to be more efficient and avoid any overlapping investments, which in the end could serve the community by offering more competitive gas prices. We were reporting about it,” she remarked.
Secondly, taking into account the balance sheet, Mulyani revealed that PGN is an open company and has undertaken various investment measures, so the issue lies in how the merger of PGN and Pertamina can be managed.
“What needs to be decided is if Pertamina will become the shareholder. How this synergy can generate a return on equity and return on maximal assets, so that the shareholders, especially public shareholders, will benefit from this corporate decision,” the minister noted.
Mulyani also revealed that the BUMN minister had highlighted the benefits of establishing synergy, particularly with regard to capital spending, efficiency, return on investment, and the strongest balance sheet of PGN that will be positive for Pertamina.
“Hence, the point is that the president’s hopes this corporate decision turns out to be good for state-owned firms in improving their balance sheet and governance, creating performance efficiency, and also having a positive impact on the community,” she stated.
Mulyani also termed this as a corporate measure to drive the service side and gas procurement for the economy in order to get a competitive price.
“Hence, it is good for society and the economy, but it will also have a positive impact on the corporation and balance sheet,” she noted.
Speaking in connection with the shareholders’ public meeting of Pertamina and PGN, Mulyani revealed that following the signing of the Presidential Regulation by the president, the meeting will be held by the shareholders of both state-owned firms.
“However, we still maintain and respect the companies’ governance, especially since PGN is a listed company. Hence, it can give a positive signal that this is a viable corporate decision,” she explained.
BUMN Minister Sumarno noted that the merger of both state-owned oil and gas companies is expected to ensure more efficient capital spending.
“Our service to the community will improve with efficient investment. Thus, we can reach out to more customers, and more of them can enjoy the cheap price of gas. This is what we hope to accomplish,” Sumarno noted.
The state-owned firm minister also remarked that the shareholders’ public meeting of the two firms will be held after an approval from minority shareholders.
“It will likely be in the end of March or the start of April after the Presidential Regulation is signed by the president,” she added.