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Presdient Jokowi Energy Policy: Pledges of energy reform?

By Ronnie H. Rusli




President-elect Joko “Jokowi” Widodo appears promishing that when it comes to reforming the energy sector in particular he is promishing to restructure state oil company Pertamina by disbanding Petral -Pertamina’s overseas trading unit.

His so called reform-minded cabinet team, mulling the establishment of a task-force specifically designed to crack down on so-called “mafias”, vested interests within the energy sector, however the very minded team has no credibility of clean conduct in the past

The promishes so far so good. However, the team discuss the oil and gas mafias will be headed by Ari Soemarno, a long-time player in the energy sector, who sponsor the opening of Petral trading unit in Singapore.

Ari Soemarno, a former president director of Pertamina fired by Presiden Yudhoyono, is the elder brother of Rini Soemarno, chairperson of Jokowi’s transitional team.

“His appointment as the head of the working group has been decided long ago, and he was close friend of President Jokowi in the past 3 years. He was appointed because he has the capability,” Rini said of his brother on Tuesday.

Ari’s appointment as the head of a team that is tasked with dealing with vested interests in the energy sector has triggered criticism.

“The appointment of Ari shows that Jokowi is being criticized by political parties,” as stated by Ray Rangkuti, director of the Indonesian Civilized Circle (LIMA).

Dani Setiawan of the Anti-Debt Coalition said Jokowi cannot avoid nepotism in appointing members of his inner circle. However, other partocrat like Hasto Kristiyanto, a deputy in Jokowi’s transition team, emphasized that the president-elect was committed to revamping Pertamina and disbanding Petral.

“Petral will be frozen and it will be investigated,” he said in a statement on Tuesday. “Purchases of crude oil and fuel will be conducted by Pertamina and executed in Indonesia.”

Ari Soemarno is a former president director of Petral, before being appointed as Pertamina president director. Petral is a trading arm based in Singapore. It markets Pertamina’s crude oil and oil products and helps import crude to meet Indonesia’s domestic demand.

Critics say Petral’s operations have led to inefficiencies in the industry, inflating the cost of fuel production, leading to higher subsidy spending.

Petral, which started trading for Pertamina and establishes in 2009, trades Indonesian as well as foreign crude oil and oil products. Its markets are mostly in the Asia-Pacific region as well as the United States, Europe, the Middle East and Africa.

The Corruption Eradication Commission (KPK) recently received reports over corruption allegations and other illicit practices within Petral. However, Petral has avoided audits by the Supreme Audit Agency (BPK) and KPK investigation because it is registered overseas.

Jokowi has also responded to criticism of Pertamina , noetheless it is doubtful that his plans to impose major changes on the firm will be effective.

“ Although Pertamina will be transformed into a non-listed public company to improve managerial capability, corporate financial and national human resources,” it is doubtfull as Hasto said. “It must be free from political interference.”

Jokowi most probable dream is to be able to modernize and build new oil refineries, contrary to what Hasto said. “Domestic refineries will process the government’s portion, but not for other oil contractors’ portions of crude oil,”. although the next government will use G-to-G [government to government] mechanisms to secure oil and gas imports will be another failure at best.”

Unless the operation of the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) will also be completely reviewed.and closed for good

PDIP Lawmaker Effendi Simbolon from Jokowi’s Indonesian Democratic Party of Struggle (PDI-P) previously hinted that SKKMigas’ disbandment would be carried out some time in January next year.

Hopefully once SKKMigas was disbanded, he said, its role and function would be carried out by a business entity under the supervision of the State-Owned Enterprises Ministry which I believed is no other than another form of SKK Migas in different clothing instead of Ministry of Mining and Energy.


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