“Functioned” by Jokowi about Efficiency, Pertamina Says It Has Saved US$2.2 Billion All

JAKARTA, KOMPAS.com – President Joko Widodo (Jokowi) once mentioned the subsidy provided by the Ministry of Finance (Kemenkeu) to Pertamina. According to him, Pertamina is one of the state-owned companies that use subsidies but there has been no effort to make efficiency.

Regarding efficiency, PT Pertamina (Persero) said it had optimized costs of 2.21 billion US dollars throughout 2021. In detail, it was obtained from the cost savings program (cost saving) of 1.36 billion US dollars, cost avoidance (cost avoidance) 356 million US dollars, as well as additional income (revenue drowth) 495 million US dollars.

Pertamina Finance Director Emma Sri Martini explained that amid the challenges of soaring crude oil prices, the company continued to strengthen its financial strategy and operational efforts. The goal is to increase efficiency in all business lines, both holding nor subholding starting from upstream, processing, to downstream.

“Pertamina has developed various policies and business strategies from a financial and operational perspective as an effort to face the challenges of world oil prices which have soared significantly,” he said in a written statement, quoted on Tuesday (21/6/2022).

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On the financial side, the company implements a cost optimization program throughout the Pertamina Group which includes cost savings (cost saving), cost avoidance (cost avoidance), and increased income. Parallel to the austerity efforts, Pertamina also runs a hedging program (hegding) for market risk management.

In addition, the company also centralizes procurement, prioritizes capital expenditures, and manages assets and liabilities to reduce interest costs or expenses.cost of fund).

“We are trying to optimize all costs and manage the financial aspects of the company, in order to reduce costs, including prioritizing projects that have fast results,” explained Emma.

In addition to tightening finances, Pertamina has also implemented operational strategies to increase revenue, which is mostly run by its subsidiaries, namely 6 subholding.

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In the upstream business, the company continues to increase production and lifting oil and gas to take advantage of the momentum of rising oil prices.

As a result, production rose 4 percent and lifting 3 percent. He explained that the positive performance of the upstream operations was contributed by the Rokan Block and foreign assets as well as consistent efforts to maintain production levels through well drilling and resource discovery.

Throughout 2021, Pertamina has drilled 12 exploration wells and 350 exploitation wells. In the same year, discovered reserves (2C) reached 486.70 MMBOE, and additional proven reserves (P1) reached 623.47 MMBOE

In the processing and petrochemical lines, continued Emma, ​​in 2021 Pertamina will implement an optimization strategy crude and product which has contributed to the improvement yield of value product about 3 percent.

This strategy is related to the selection and economical substitution of crude oil, and maximizing high valuable products with high spreads. On the other hand, refinery production also increased in response to higher energy demand due to the national economic recovery.

As well as in the transportation and logistics lines, Pertamina optimizes load factor to achieve revenue and cost efficiency. On the gas business side, Pertamina has also increased the volume of gas trade and transportation as well as the volume of oil transportation.

“And after the legal end state, we are also intensifying resource sharing, like sharing facilities and sharing development agreements, especially in upstream subholding,” he added.

Also read: Update on fuel prices at all Pertamina gas stations as of June 2022

Emma added that the positive performance downstream was also supported by the government through the recognition of compensation for the difference between HJE JBT Solar and JBKP Pertalite in 2021, reaching around US$4 billion or around Rp. 58.6 trillion excluding taxes, as well as payments for compensation in 2018 and 2019 of Rp. 1.7 billion US dollars or around Rp. 24.1 trillion excluding taxes.

Previously, Jokowi’s “scorn” towards Pertamina was conveyed when he opened a limited cabinet meeting at the Presidential Office on Monday (20/6/2022) yesterday. He asked ministries, institutions, and state-owned enterprises to make as much expenditure efficiency as possible so that the government has broad fiscal leeway.

“There is a subsidy from the Minister of Finance (Minister of Finance) without any efficiency efforts at PLN, at Pertamina. It looks really good,” said Jokowi.

“Which can be made efficient, which can be saved, then which leaks can be prevented. Everything must be done in positions like this,” he said.

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