JAKARTA (TheInsiderStories) – President Joko Widodo injects assets worth of Rp2.1 trillion (US$141.89 million) to PT Pertamina to improve the capital structure of the state-owned energy producer. The additional capital comes from the transfer of assets from the energy and mineral resources ministry, which comes from the 2010 to 2017 State Budget.
The policy contained in the government regulation Number 50 Year 2020 on Additional State Capital Participation for the company released on Tuesday (09/22). The regulation was enacted in Jakarta on Sept. 10, 2020, signed by the head of states and promulgated on Sept. 11.
The largest injections transferred to Pertamina is the operation of state property in the form of a natural gas distribution network for former households from the directorate general of oil and gas worth of Rp1.3 trillion. The rest in the form of other instruments.
Currently, the oil and gas producer have applied for a loans around $3 billion through a syndication of six foreign banks. The company is reportedly seeking funding from European banks, BNP Paribas, Citi, Credit Agricole, MUFG Bank, Societe Generale, and Japan’ Sumitomo Mitsui Banking Corp., for business expansion.
In June, CEO of Pertamina, Nicke Widyawati, said that the company needed $133 billion in funds until 2026 to boost production capacity. For this year, she said Pertamina would spend around $6.2 billion for a number of national strategic projects.
Beside from internal funding, 10 percent of the funds its expecting from project financing, 28 percent from external financing, and 15 percent from equity financing. The company’ funding options open from stocks (partnership or initial public offering), debt securities (average tenure 1 – 10 years and limited by debt to equity ratio), and banking (average tenure 4 – 5 years).
Widyawati explained, “For this year we plan to spend $6.2 billion. We actually cut 23 percent of this year’ targets. Most of these are for national strategic projects, like the development of refinery.”
In the first semester of 2020, Pertamina recorded a net loss of $767.92 million from in the same period in 2019 booke a profit of $659.96 million. The company’ revenues also decreased from $25.55 billion to $20.48 billion. In addition, upstream production costs and lifting also increased from $2.38 billion to $2.43 billion.
In the same period, the domestic sales of crude oil, natural gas, geothermal energy and Pertamina’ oil products fell from $20.94 billion to $16.56 billion. While, export sales of crude oil, natural gas and oil products actually rose from $1.61 billion to $1.76 billion in the first half of this year. The reduction in sales was also due to the reduction in the cost of subsidies from the government, from $2.51 billion to $1.74 billion.
Written by Editorial Staff, Email: firstname.lastname@example.org