Ika Krismantari, The Jakarta Post, Jakarta

The Jakarta Post

The government has announced its plans to give oil and gas company Pertamina, and steel producer Krakatau Steel, public company status (without public listings), before the end of the first semester, a minister said Wednesday.

State-owned Enterprises Minister Sofyan A. Djalil told reporters, after attending the Pertamina shareholder meeting Wednesday evening, the decision was necessary to make the two state companies more transparent and professional.

Djalil said the plan was going ahead after getting the green light from the Capital Market and Non-Bank Financial Institution Supervisory Board (Bapepam-LK).

"Bapepam just needs to scrap an article in one of its regulations that says a state-owned company can not be a non-listed public company," Sofyan said, expecting all the proceedings to conclude in the first semester of 2008.

The main benefit of the non-listed status, he said, was the ease in launching an initial public offering, as the two companies were already accustomed to the pudency demanded under the new status.

As a non-listed public company, the two companies will be required to comply with all the regulations set by the stock market, even though the shares would not be listed.

In order to obtain the status, a Bapepam regulation states that ownership of a single business entity must be divided among at least 200 parties.

To keep government control over the two large firms, Sofjan said all 200 parties would be state parties, mainly under the ministry.

Meanwhile, Pertamina corporate secretary Sudirman Said told The Jakarta Post that shares would also be given to each company's internal pension fund.

Sudirman said Pertamina would use the new status as a learning tool for how to manage a good public company, and prepare itself to go public in 2012 as planned.

Also discussing the meeting, finance director Frederick Siahaan said Thursday that shareholders had approved the company's financial plan for 2008.

Under the plan, Pertamina will spend Rp 20.4 trillion (US$2.1 billion), a 45-percent increase compared to estimated Rp 14 trillion in 2007.

He said the company was targeting to increase its oil and gas production by 25 percent and 34 percent to 180 barrels of oil per day, and 1.49 billion cubic feet per day, respectively.

He also said that the meeting had agreed on the government plan to create a new state-owned company specializing in geothermal energy.

Under the plan, Pertamina's subsidiary for geothermal energy, Pertamina Geothermal Energy, will be included under the new state-owned firm so that Pertamina can focus on oil and gas exploration activities.

Separately, Pertamina vice president Iin Arifin Takhyan said that he was optimistic that the ongoing price negotiations for gas from Senoro field in Central Sulawesi would be settled before the February deadline set by Upstream oil and gas regulator BPMigas.

"We are still negotiating. We want the price to follow the oil price, and we are seeking a market price," Iin said, adding that the price could reach up to $8 per million cubic feet, in line with market prices.

In previous negotiations, Pertamina and other stakeholders, Medco and Japan-based oil company Mitsubishi, agreed on a price of $3.85 per million cubic feet with an oil price assumed at $35 per barrel.

The recent surge in oil prices has made renegotiation inevitable between the gas producers, Pertamina and Medco, and buyer, Mitsubishi.