Indonesia Energy Corp Ltd (INDO)

[FACT-MASTER]

Interesting IPO to watch for in Indonesia (PHE)

https://fraksi.pks.id/2023/05/11/kritisi-ipo-pertamina-hulu-energi-aleg-pks-jangan-sampai-hilangkan-kendali-negara/

in English:

Jakarta (11/05) — Member of Commission VI DPR RI from the PKS faction, Amin Ak criticized the planned initial public offering (IPO) of Pertamina Hulu Energi (PHE) which will be held in June 2023.

PT Pertamina's subholding, said Amin, targets to raise funds of at least Rp 20 trillion or the equivalent of US$ 1.36 billion.

According to Amin, PHE's IPO must be able to guarantee that the control of the state or company that has a strategic role and value for the nation's energy security will not be lost or reduced.

According to Amin, the release of PHE share ownership to the private sector, especially foreigners, is feared to affect the main and strategic control by the state over PHE which will ultimately have an impact on fulfilling people's interests in the energy sector.

PHE, continued Amin, is currently a subsidiary of Pertamina which is responsible for managing and managing upstream assets (exploration to production), with oil and gas production of around 50% of national oil and gas production.

So, continued Amin, its existence is very important for the fulfillment of the livelihood of many people in the energy sector. PHE is also important and strategic for efforts to build national energy security.
PHE is also a subsidiary of Pertamina which has been carrying out public service obligations borne by the government, such as the provision of subsidized fuel oil and LPG to remote parts of the Republic of Indonesia.

"With this strategic position for the fulfillment of energy for the people, the state must be the main controller for all PHE policies and business orientations," said Amin.

The PKS politician is also worried that the loss or reduction of state control over PHE will have an impact on energy tariff policies. Removing subsidies or increasing energy tariffs will add to the people's burden and can create new poverty groups due to the multiplier effect arising from the increase in energy tariffs.

“This also contradicts the 1945 Constitution, specifically Article 33 paragraph 3; "Earth, water and natural wealth contained therein are controlled by the state and used for the greatest prosperity of the people," said Amin.

On the other hand, said Amin, the IPO plan by offering 10% to 15% shares is estimated to be insufficient to cover Rp 70 trillion in debt and sufficient capital expenditure of around US$ 4 billion to US$ 6 billion or the equivalent of Rp. 60 trillion to Rp. 90 trillion. per year. Losses of Rp.70 trillion suffered by PHE should be thoroughly evaluated, because they may have been caused by problematic business governance.

"Meanwhile, regarding PHE's efforts to increase business scale both in exploring new sources of oil and gas, developing oil and gas exploitation, and oil and gas processing technology can be carried out through cooperation in terms of expertise and technology with domestic and foreign private parties it is still possible as long as the main control and strategic on the part of the Indonesian government," he concluded.