PT Pertamina Gas (Pertagas), a subsidiary of state-owned energy giant Pertamina, has given gas trader PT Mutiara Energy until the end of this year to settle all of its unpaid debts that have reportedly weighed on the former’s performance. Otherwise, legal action will be taken.
The Supreme Audit Agency (BPK) has recently announced the results of its audit on Pertagas’ financial' performance, in which the agency found a number of irregularities in the company’s gas trade and transportation businesses from 2014 to the first half of 2016.
According to the BPK, Pertagas had to bear losses worth US$ 16.57 million from the impairment of bad debts totaling $ 11.86 million from gas sales to Mutiara Energy.
Pertagas president director Suko Hartono said the company would do everything it could to force Mutiara Energy to settle the unpaid debts, while adding that warning letters had been sent twice to the latter last year.
“We’re optimistic that unpaid debts from Mutiara Energy can be settled in the near future in accordance with existing regulations, or before the end of 2017 at the latest,” Suko said recently.
Meanwhile, Pertagas public relations manager Hatim Ilwan said if Mutiara Energy failed to settle its debts by the designated deadline, his side would take the case to the court. Prominent economist Faisal Basri has long criticized Pertagas’ gas trading scheme, in which the company sells most of its gas to dozens of traders in a lengthy supply chain, resulting in bloated gas prices.
According to his research in 2014, Pertagas sold its gas to trader PT Odira, which would later resell the gas to Mutiara Energy at a price of $ 9 per million British Thermal Units (MMBTU). Then, the gas would have to go through two other traders before being received by PT Torabika as the end-user at a price of $ 14.5 per MMBTU.
The BPK has also pointed out the inefficiency of Pertagas’ gas transportation business, particularly in the use of the company’s pipelines connecting Belawan with Medan Industrial Area (KIM) and Sei Mangkei Special Economic Zone (KEK) in Sumatra. According to the BPK, the pipeline project, estimated to be worth nearly $60 million, may weigh on Pertagas’ financial performance in the long run because, among other things, there have been no firm off-takers for the gas transported through the facility.
The Belawan-KIM pipeline is initially expected to transport 89 million standard cubic feet per day (MMSCFD) of gas, While the KIM-KEK pipeline is projected to transport 40 MMSCFD of gas. Pertagas has conducted another feasibility study and recalculated the economic value of the project according to the real conditions in the field.
“In the future, Pertagas won’t just focus on gas transportation business as we will also boost gas trading through aggressive marketing activities,” said Suko, While adding that such an effort would help increase the utilization of Pertagas’ pipelines.
At present, Pertagas is also in the process of developing gas transmission pipelines spanning 267 kilometers from Gresik in East Java to Semarang in Central Java, which have an' investment value of around $ 515.7 million. The Gresik-Semarang pipelines, expected to be completed in mid-2018, will transport gas sourced from the Jambaran Tiung Biru field in East Java, operated by another Pertamina subsidiary Pertamina EP Cepu.
Within the first eight months of 2017, Pertagas recorded $ 90.6 million in net profit, up 108 percent compared to the same period last year.
Jakarta Post, Page-14, Thursday, October 12, 2017
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