JakartaPost-Mar 4
The government is considering merging two subsidiaries of state-owned oil and gas holding company Pertamina after a corruption scandal over billing and selling lower-grade imported fuel as more expensive high-octane fuel, which caused an estimated US$11 billion in state losses. State-Owned Enterprises (SOEs) Minister Erick Thohir vowed on Saturday to institute reforms as a preventive measure for similar fraudulent practices, including possibly merging PT Pertamina Patra Niaga and PT Kilang Pertamina Internasional (KPI), two subsidiaries allegedly implicated in the ongoing graft case. “Regarding Pertamina, we will do a thorough review [to] look at what we can fix,” Erick told reporters on Saturday, as quoted by Kompas.com. “We will do a review of our subholding companies and the possibility of merging two firms,” he added, indicating these were part of the improvement measures. The Attorney General’s Office (AGO) is investigating executives at Pertamina’s fuel trading, shipping and refining units, including Patra Niaga, KPI and PT Pertamina International Shipping.
The Assistant AGO for Extraordinary Crimes has named two president directors and four senior executives of Pertamina subsidiaries as suspects in the case, as well as three individuals from private oil and gas shipping companies. According to the AGO, the nine suspects allegedly colluded to manipulate import and export deals for Pertamina between 2018 and 2023, violating an Energy and Mineral Resources Ministry regulation that requires the state-owned oil and gas giant to prioritize domestic crude oil before considering imports. The scheme allegedly began by deliberately reducing production at Pertamina refineries to artificially induce underutilization of domestic oil, which prompted the company to import crude and refined petroleum products to meet domestic demand. The executives are also suspected of colluding to fix import prices prior to official Pertamina tenders for the purpose of illicit enrichment. AGO investigators also discovered that lower-grade fuel with a research octane number (RON) of less than 90 was sold as the more expensive RON 92 fuel under the local brand Pertamax. Read more at:
