Pertamina deficit presents new crisis

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Achmad Nur Hidayat MPP
Achmad Nur Hidayat MPP, Public Policy Expert and Chair of the Center for Political Economy Studies at UPN Veteran Jakarta.

Thanks to Mrs Sri Mulyani for alerting the public and disclosing Pertamina’s deficit issue, allowing all Indonesia to be aware of Pertamina’s performance ranking, including Commissioners: Ahok and Pertamina’s Directors are included. They have failed to provide any satisfactory solution to the looming deficit since 2021. 

The disclosure is also a warning for all levels of SOEs, particularly the Minister of SOEs, who has recently been busy campaigning for the 2024 presidential election. The disclosure also revealed two actualities: the public does understand the reason for Pertamina’s fiscal deficit: that it is due to an erroneous estimation of global crude oil prices, then predicted to be around US$ 63; crude now exceeds US$ 100 per barrel. On the contrary: the public can witness just how lavish salaries and large bonuses are disproportionate to their actual efficiency in successfully overcoming the fiscal deficit. 

If Pertamina’s Commissioners and Directors had been more resourceful, Pertamina would have embarked upon other survival strategies, instead of expecting a handout from the state. The public can plainly see that Pertamina staff, who are amply recompensed for their services, have not performed adequately, leaving the big hole in Pertamina’s finances for the Government to try to handle. 

Pertamina strategists could have searched out other sources of income rather than simply burdening unhealthy state finances to pay off its deficit. 

Both Commissioners and Directors should have ruminated on building a healthier and better balance sheet. With the import prices rising, Pertamina could have developed creative ways to avoid having to bill the Government for their deficit. 

Apart from the mammoth fiscal deficit, the situation also uncovers a crisis in Pertamina, namely, an inevitable lack of capability in creating effective solutions to a problem. Pertamina ranks have failed to save its finances, and simply took advantage of the increase in crude oil prices. Ahok, the directors and commissioners could do nothing about finances, simply passing the hot potato to the state. How strange. An excellent professional attitude to solve problems. Pertamina encountered a problem, but the state must somehow solve it, which means Pertamina’s management has failed to address it successfully. What a shame.