Pertamina and govt fuss over asset sales

24 March 2003 00:00  [Source: ACN]

Pertamina and the Indonesian government are in disagreement over to what extent the state-owned oil, gas and petrochemical major should reduce its ownership of non-core assets.

According to the company's spokesman, Ridwan Nyak Baik, the government wants Pertamina to exit its non-core assets, all of which are profitable, to investors.

Pertamina, on the other hand, prefers to sell part of its ownership in some of its non-core assets either to a strategic partner or through an initial public offering (IPO).

Pertamina's non-core assets include Rumah Sakit Pusat Pertamina (a hospital), Patra Jasa (hotels and restaurants), Pelita Air Service (air transportation), Patra Dok Dumai (docks), Tugu Pertama (oil and gas insurance) and Pertamina Tongkang (a lighters supplier).

'Some of these assets are important to us because we need them for our core business,' Ridwan said, referring to Tugu Pertama, Patra Dok Dumai and Pertamina Tongkang.

'Furthermore, our non-core assets are performing very well, so there really is no need to get rid of them completely,' he added.

The government wants the company to use the funds from the sale to develop Pertamina's core business - oil, gas and petrochemicals - so as to make it more competitive in the face of stiff foreign competition.

Ridwan was unable to say when Pertamina and the government would arrive at a final decision on the issue. No deadline has been set for the asset sales.

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