PERTAMINA’S CORPORATE ACTION WORSENS THE PERFORMANCE OS STATE OWNED GAS COMPANY

If it is true that the main purpose of Pertamina in acquring the state-owned gas company (PGN) is solely to implement open access, the corporate action will not provide a significant advantaged for Pertamina. The takeover attempt is feared would increase the burden of Pertamina who already reaped huge profits in many lines of business.

Pertamina’s attempt to acquire PGN is actually the culmination of hosilities between the stateowned companies that lasted this long. The trigger is gas governance liberalization policy. Through Regulation of the Minister of Energy and Mineral Resources No. 19/2009, the Government opens trade opportunities and natural gas transportation business for all business operators in a free competition through open access scheme.

Initially, there is a difference of opinion between Pertamina and PGN in addressing open access policy. One the one hand, PT Pertegas is very excited to implement open access without reserve. On the other and, PGN was determined not to implement open access totally at this point. The reason is that there are still technical and economic issues related to the availability of transmission and sistribution pipeline infrastructures to be resolved.

Thus, said reseracher of Center for Energy Studies Gadjah Mada University, Fahmy Radhi, who spoke in a Focus Group Discussion “Gas Governance as the Embodiment of Energy Sovereignty in Indonesia” at Gadjah Mada University (UGM) in Yogyakarta, on Monday (January 20).

Moreover, Pertamina has been continuously hit by various problems, thus further distancing Pertamina’s hope to become a World Class Oil Company. Still fresh in the memory of the public about Pertamina’s request to the government to raise prices of 12-kg LPG by 68% without consulting the government. Finally, the policy was revoked by the government in just five days.

Pertamina’s plan to increase the number of oil refineries which have been proposed since many years ago has never materialized until now. As a result, Indonesia is a net importer of fuel which is increasingly weighing on Indonesia’s trade balance. Defeat-by-defeat in the struggle to seize oil and gas fields with foreign oil companies have left a stigma that Pertamina was considered unqualified in managing oil and gas fields in its own country.

“In these conditions, Pertamina’s decision to acquire PGN is a blunder. Not only will it further aggravate the corporate load of Pertamina, but can also worsen post-acquisition performance of PGN, even could potentially lower PGN stock prices,” Fahmy said.

Not efficient

Thus, it seems that the year 2014 is a gamble for (PGN). Because, not to mention the implementation of the open access concept related to the use of PGN’s gas pipeline infrastructures jointly with other companies. Now, the Ministry of State-Owned Enterprises plans to directly acquire PGN to become a subsidiary of PT Pertamina.

The original plan, which was to acquire subsidiary company of PGN, namely PGAS, was considered less effective. Now, Dahlan Iskan provides an option to directly acquire PGN and automatically acquire PGN’s subsidiaries.

“There are two options regarding the implementation of acquisition by two stages or one stage. If in the first two stages, PGN acquire Pertagas, Pertamina’s subsidiary. On the second stages, Pertamina directly acquires PGN,” said Dahlan.

However, both options will still make PGAS a subsidiary of Pertamina. The first option is that Pertamina directly acquires PGAS, and the second option is PGAS acquires Pertagas and will later be acquired by Pertamina. The Ministry of State-Owned Enterprises will choose the best and most appropriate option. Will the option be made or done simultaneously (in one stage only)?

The acquisition plans is now being examined carefully by Danareksa and Bahana Securities. The study includes whether Pertamina’s acquisition of PGN coincides with PGN’s acquisition of Pertagas, or Pertagas is acquired first, and then Pertamina acquires PGN. The Ministry of State-Owned Enterprises is still reviewing Pertamina’s opportunities in acquiring a stake in PGN.

The plan was in line with government’s target to establish a large-scale oil and gas company. In short, PGN becomes a subsidiary of Pertamina, and Pertagas who was formerly a subsidiary company becomes the a sub-subsidiary company.

In response to this, analyst of PT Asjaya Indosurya Securities, William Suryawijaya, said that it would not be efficient it the acquisition of PGAS by Pertamina is in two stages. The reason is that however both options are, PGAS will eventually be acquired and will become a subsidiary of Pertamina. “Any option can be taken. However, it is more efficient if the acquisition is done in one stage,” William said.

According to William, for this time, what is needed is how Pertamina could negotiate with PGAS so that the acquisition process will be done on one stage in order to be more efficient. In fact, what is required is Pertamina’s lobbying capability so that PGAS can be acquired in one stage (Pertamina directly acquires PGAS). (E) 

Business News - January 22, 2014

TOURISM SECTOR CONTRIBUTE TO STATE’S FOREX INCOME

Report of the Ministry of Tourism and Creative Economy 2013 posted significant increase in tourist expenditure in Indonesia. In 2013, 8.6 million foreign tourists coming to Indonesia contributed forex of USD 9.8 billion or around Rp 119.8 trillion, meaning an increase against income of 2012 at USD 9.1 billion or around Rp 110.8 trillion.

Forex income from tourism was most meaningful to state’s income amidst declining income from export due to sluggish global economy. Meanwhile, in 2013 expenditures by domestic tourists came to Rp66.5 trillion, or an increase of 9.2% against that of 2012 at only Rp60.9 trillion. Income from international and domestic tourists brought positive impact on economic growth of the real sector in tourism centers like hotel accommodation, transportation service, handicrafts making, souvenirs, entertainment etc as the fund was directly flowing in to the people.

Data of BPS obtained on Monday [13/1] mentioned that room occupancy at starred hotels on November 2013 in 23 provinces in Indonesia came to 56.10% on the average or up by 0.91 points against that of November 2012 at 55.19%. Meanwhile room occupancy of hotels in October 2013 was posted at 54.23%, in November 2013 increase was 1.87%.

In November 2013 highest room occupancy pas posted in the Province of North Sulawesi 96.78%, followed by Central Sulawesi 69.34% and East Kalimantan 66.48%; while the lowest was in North Sumatra posted at 44.08%.

Increase of room occupancy [RO] in November 2013 against November 2012 was in some provinces, with highest increase in the province of North Sulawesi 20.13 point, followed by West Nusa Tenggara 13.43 point, and the South Kalimantan Province 10.56 points. Meanwhile against October 2013, increase or hotel’s RO in November 2013 was in most provinces, the highest increase in the Province of Bali 0.37 points.

By hotels classification, the highest RO in starred hotels by November 2013 was posted in 5-star hotels 60.71%. Meanwhile the lowest was in 1-star hotels at 48.20%.

Length of stay

Length of stay [LS] of foreign tourists in starred hotels in Indonesia through November 2013 in 23 provinces came to 1.86 days with posted downturn of 0.04 points against average LS in November 2012. Meanwhile compared to average LS in October 2013 there was downturn of 0.05 days. Generally speaking the average LS of foreign tourists in November 2013 was higher than average LS of tourists coming to Indonesia by 2.66 days and 1.70 days respectively.

The breakdown by province the average length of stay in Indonesia was the highest in the province of Bali 3.12 days, followed by NTB 2.58 days and East Kalimantan 2.57 days. The lowest LS of visitors was West Java 1.46 days. In terms of foreign tourists, the average LS was : in the province of West Kalimantan 4.46 days. The shortest LS was in the province of West Java 1.62 days. As with visitors to Indonesia, the highest LS in Bali 2.65 days, the shortest in West Java 1.40 days. (SS)   

Business News - January 17, 2014

HARBOR MANAGER RATED AS HAVING FAILED TO ANTICIPATE INCREASING FREIGHT FLOW

As a maritime and archipelago state, Indonesia was expected to have strong and reliable shipping industry. However in reality the existing infra-structure was not ultimate especially in the harbor sector. This was the handicap that caused logistics cost to be high at home.

It was not a secret that long dwelling time of ships at Tanjung Priok Harbor was the main contributor to high logistics cost in Indonesia. The upjump of average dwelling time at Tanjung Priok Harbor from 4.8 days in October 2010 to 8 – 10 days in 2013 was rated as setback that worsened trade climate especially in export and import.

A condition as such generated anxiety among ship line operators as there was no assurance for proprietor of goods in the loading and unloading process which was time consuming. A condition a such underscored that service performance was still below businessworld’s expectation. Long dwelling time would have its effect on transportation and logistics cost, on shore or off shore while harbor’s tariff kept increasing.

Under the circumstances, as told by Akbar Djohan as Chairman of the Permanent Committee of Logistics, Regulations and HRD KADIN Indonesia, it seemed no exaggeration to say that the harbor management had failed to anticipate increase of flow of goods. The point was that Indonesia’s economic growth which in 2013 came to 5.7% - 6% had jacked up increase of goods flow through Tanjung Priok harbor. It was most regretful that the condition of Tanjung Priok harbor over the pst 3 years had not posted any significant progress to the target of tackling logistics inefficiency at the harbor was never met.

Talking about infra structure, the Government always threw a discourse to jack up development and harbor building up to the remote areas. The reason was that infra structure development, particularly harbor building was rated as important and supportive to Inter territory connectivity which would strengthen national industrial competitiveness toward Asean Free Trade 2015.

The fact was that as a vast archipelago state, the condition if harbors in Indonesia was measly by quality or quantity. Supposedly the Government and harbor management was consistent in harbor development, expensive or innovative because it took through planning to build harbors to anticipate future need.

Infra structure building must be based on the long term need. Meaning it did not have to wait till problem arises before starting to build a harbor, new or alternative. Apparently the Tanjung Priok, which was the harbor to rely on, was now stagnated while the alternative harbor was not completed, Chairman of the Association of Indonesian Logistics Zaldy was quoted as saying during interval of the discussion session entitled “The impact of harbor performance on national economy” on Saturday [11/1]

Master Plan of Kalibaru Harbor

In developing Tanjung Priok harbor, PT Pelabuhan II Indonesia had prepared Masterplan of Kalibaru harbor or New Tanjung Priok Harbor which was estimated to cost Rp22.66 trillion of investment. The concept of Kalibaru harbor was introduced in November 2010 and ground breaking had started on March 2013.

Since the beginning the Kalibaru harbor was designed to be supporter of Tanjung Priok harbor considering that the Tanjung Priok harbor was overloaded.

Phase I of the new Tanjung Priok harbor consisted of 3 contaner terminals and 2 oil fuel terminals built on 195 hectares of land. This place would increase harbor capacity to become 4.5 million TEU containers and 9.4 million m3 oil and gas. By end of December 2013, the progress of kalibaru terminal building was claimed to be 20% accomplished. Pelindo II was optimistic that by end of 2014, the Kalibaru Terminal would be completed and start operation. Today it was till at the stage of hammering foundation poled at 3,346 location points. Pelindo II had appointed Mitsui & Co as preferred bidder for operating the first container terminal.

The question now was whether Pelindo II was able to race against time to complete the project on time, considering the high increase of freight traffic. Logistic inefficiency was inevitable. On the one hand Pelindo II needed enormous fund to manage and develop the Tanjung Priok harbor, on the other hand for the Jalibaru harbor project Pelindo II was still at the stage of Mou signing with Mitsui in terms of financing while commitment by banks was only agreed at Rp 4 trillion.

What made things worse was that even the internal condition of Pelindo II management was critical after resignation of some high officials which was orchestrated by workers’ stike who were offended by the arrogance of R J Lino the President of the company. Spontaneously on December 23-24 last, under the coordination of labor union of PT Pelabuhan Indonesia, a number of workers were waging demonstration. Thank God the demonstration did not shatter economic activities at the harbor. Supposely the Tanjung Priok harbor did not have to have such disturbance considering the strategic position for goods flow, such was the expectation expressed by Stakeholders of the harbor. (SS)  

Business News - January 17, 2014

GOVERNMENT RESOLVED TO REFORM HRBOR

Many factors caused logistics cost borne by companies to be high today. One of the underlying factors was inadequate infra-structure which was not supportive to logistics process from harbor to delivery. For that matter the Government was resolved to reform the harbor sector as an effort to enhance efficiency.

The Director General of Sea Transportation, Ministry of Transportation, Bobby R. Mamahit stated in Jakarta on Monday [13/1] that the Government planned to reform harbor’s infra structure this year. The Government planned to apply single window procedure in the management of freight documents and loading and unloading process to be carried out by on line.

Bobby said that the Government would increase the number of harbor doors to speed up traffic of goods so there should be no queue at the harbor. Besides, harbor management, especially in terms of increasing harbor’s capacity to support logistics would be improved. For that matter, the Ministry of Communication had allocated budget of Rp6 trillion for building of harbor infra-structure. Bobby stated that the budget would be spent on completing, continuing and building new harbors which were strategic for passengers or logistics.

Beside the above measures, in the effort to reform harbor as a whole, Bobby said, today the Ministry of Transportation was concentrating effort on detecting suspects who made illegal collection especially in Tanjung Priok operational area Jakarta. Bobby said that he had commanded the Sea on Coastland Security Force [KPLP] to crackdown on any person who picked up illegal collection.

However did not state the deadline for the investigation process which disadvantaged the harbor consumers. According to Bobby, so far he was still at the stage of investigation. Furthermore he confirmed that there was nothing new about illegal collection. Although this was to set up a one-stop service to prevent face-to-face contact between officials and consumers.

Meanwhile General Manager of Pelindo II Tanjung Priok Ari Heryanto said that the Tanjung Priok was enhancing efficiency at al levels of harbor service by applying IT which was integrated with all related institutions to step up efficiency toward the AEC in 2015. By 2014 all activities in harbor service system would be IT based and ready to meet customers’ need.

The IT service system included also single billing system for all types of sea freight service and loading-unloading of goods as well as containers in terminal 1, 2 and 3 conventional or multi-purpose harbor at Tanjung Priok. Ari was expecting that all logistics operators including exporters and importers at Tanjung Priok harbor would support the IT-integrated efficiency ehanchment plan.

Ari had met several times with stakeholders at Tanjung Priok harbor, today there was even port community in which there was even port community in which there was also businesspeople who would give their input for harbor development at Tanjung Priok harbor. He also disclosed land management program to increase storage capacity of stacked goods and containers at the harbor. (SS)   

Business News - January 17, 2014