The establishment of oil and gas holding company (holding) is the government’s initiative to improve national energy security, it was revealed in PWYP Indonesia’s Discussion entitled “Oil and Gas Holding Company and the Future of Indonesia’s Oil and Gas Institutions”, (30/1) ago. News related to the establishment of the holding began to spread out after PGN held an Extraordinary General Meeting of Shareholders (25/1) ago. The holding has successfully merged Pertamina and PGN, whereas Pertamina is appointed as the parent holding, followed by PGN as its subsidiary. As for Pertagas, which previously was the subsidiary of Pertamina, now has been positioned under PGN.

Fajar Harry Sampurno, Deputy of Mining, Strategic Industries and Media of Ministry of State-Owned Enterprise (SOE) explained that the synergy of Pertamina and PGN will integrate gas infrastructure from the western part of Indonesia (Arun) to the Eastern part of Indonesia (Papua) without any duplication. Once the holding is established, there will be a joint utilization between PGN and Pertagas, so the gas price hopefully shall be lower for end-consumer.

Harry added that the government will transfer 56.96% of its shares in PGN to the Pertamina. Pertamina shall reposition Pertagas under PGN, which was the prior subsidiary company under Pertamina. While the restructuration between Pertamina and PGN will be conducted through multiple options, such as a merger, share participation (inbreng), and acquisition.

On the other hand, in regards to PGN’s transparency as the subsidiary company, PGN is still auditable by the Audit Board of Indonesia due to a reason of 1 golden share which entitled by the government in PGN. The golden share is a form of state control of the state-owned enterprises belongs under the holding.

Fabby Tumiwa, Executive Director of Institute for Essential Services Reform (IESR) as well as Board of PWYP Indonesia has stated that the vision of the holding is still unclear, whether only focusing on oil and gas or in the energy business. “We are aware that oil and gas business is not sustained,” said him. He mentioned that the government still focuses on the process of holding establishment although the grand design of the business is still out of reach.

Meanwhile, the Revision of Oil and Gas Law which is currently discussed on the House of Representative mentioned that Special Business Entity (BUK) has been projected as the oil and gas institution in the future, which will implement the upstream and downstream activity and the responsibility shall be direct to the House of Representative. Whereas the structure of BUK consists of all state-owned enterprises in oil and gas sector as well as the implementing body of upstream and downstream activity.

Aryanto Nugroho, PWYP Indonesia’s Manager of Advocacy and Network explained that there is an ongoing process in Legislation Body of the House of Representative to harmonize the revision draft of Oil and Gas Law and State Owned Enterprise Law, which will regulate the institution of oil and gas. Unfortunately, there has not any clarification on the synchronization between the established holding and BUK which is suggested in the Revision of Oil and Gas Law. [AN]