Pertamina's Long Road to IPO for Upstream Subholding

By Editorial Team 16/06/2020
Summary

PT Pertamina's plan to hold an initial public offering (IPO) for Upstream Subholding will take a long time. The reason is that the parent company of Upstream Subholding and its subsidiaries have privilege contracts. PT Pertamina Hulu Energi (PHE) is the parent company. Meanwhile, the subsidiaries are PT Pertamina EP (PEP), PT Pertamina EP Cepu (PEPC), PT Pertamina Hulu Rokan (PHR), and Joint Operating Body (JOB). Moreover, PEP has a heritage working area with full privileges, which can only be owned 100 percent by the government. It used an exclusive production sharing contract (PSC) called Pertamina Petroleum Contract (PPC). This contract only applies to PEP.

It means, before the IPO, Pertamina must change all contracts into standard contracts. Based on Article 33 of the 1945 Constitution, the privileges of State-Owned Enterprises (SOEs) cannot be transferred to the public. All privileges in the contract must be returned to the state, in this case, the government if Pertamina's subsidiaries want to hold an IPO, including those who are becoming Upstream Subholding. "All PSCs must be changed to PSC standards," a source familiar with the matter told Katadata.co.id.

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