Pertamina pushes for more efficiency

State-owned energy giant Pertamina aims to save up to US$100 million through the introduction of efficiency measures in the company’s integrated supply chain (ISC) activities.

Pertamina ISC senior vice president Daniel Purba said the company expected to reach the target by for example, finding cheaper suppliers and optimizing the newly upgraded facilities in Tanjung Uban and the Sambu islands, both in Riau Islands, to manage its own fuel blending process in an attempt to reduce imports of finished fuel products.

“We will also import more crude oil from Asia, because we can obtain better margins there,”

Daniel said recently Pertamina’s ISC activities covers the trading, procurement and distribution of crude oil, gas and fuel. Last month, Finance Minister Sri Mulyani Indrawati issued a ministerial regulation revoking the imposition of income tax for oil obtained from Indonesian Fields but sold by a contractors trading arm overseas. 

Previously the government charged 3 percent of income tax for oil transactions using such a scheme. However, it is common for foreign contractors to sell their oil through trading arm subsidiaries located abroad. Pertamina sees the change in regulations as an opportunity to boost domestic crude oil supply.

Daniel said the company, for this year, was planning to secure 181.3 million barrels of oil from domestic procurement, a slight increase from the 176.6 million barrels secured in 2016.

“With the revocation of the income tax rule, we expect there to be more contractors that are willing to sell their oil to us,” he said. Pertamina’s ISC unit was established in 2015 after the dissolution of its Singapore-based subsidiary Petral, the operation of which was cancelled as a result of allegations of corruption and illicit practices in procurement. 

Daniel previously served as Petral’s vice president. According to Pertamina, the unit has earned $523 million in efficiency from the introduction of streamlined fuel procurement. The full liquidation of Petral, meanwhile, is still pending the debt clearance of its two subsidiaries, namely Zambesi Investment Ltd., established in 1979 and based in Hong Kong, and Pertamina Energy Services Pte. Ltd., which was created in 1992 and incorporated in Singapore.

Jakarta Post, Page-15, Wednesday, April, 12, 2017