Jakarta – Given the plethora of corruption cases that have tainted Pertamina, it came as no surprise when the Attorney General's Office (AGO) unveiled scandalous fuel imports involving top executives of the state oil and gas company's subsidiary PT Pertamina Patra Niaga, which is believed to have inflicted Rp 193.7 trillion (US$11 billion) in losses on the state.
As former energy and mineral resources minister Sudirman Said put it, the latest graft case to rock Pertamina is just an old game with new players. Sudirman must be aware of why corruption persists in Pertamina despite numerous reforms, he was dismissed by then-president Joko "Jokowi" Widodo in 2016, coincidentally perhaps after discovering mafia practices in the operations of Pertamina Energy Trading Ltd (Petral), which was eventually liquidated.
The AGO has named nine Pertamina executives suspects for allegedly colluding to manipulate import and export deals for the company between 2018 and 2023, violating an Energy and Mineral Resources Ministry regulation that requires the state-owned oil and gas producer to prioritize domestic crude oil before considering imports.
The scheme currently under investigation reportedly started with a deliberate reduction in production at Pertamina refineries to create the illusion of underutilization of domestic oil. It led the company to import crude and refined petroleum products to fulfill domestic demand.
State prosecutors also found that lower-grade fuel with a research octane number (RON) of less than 90 was sold as the more expensive, higher-octane RON 92 fuel under the brand Pertamax. Shipping bills for fuel imports were also allegedly inflated between 13 and 15 percent.
Graft cases have long stained Pertamina's history book, due to the huge assets it controls. One of the most high-profile cases was unveiled in the mid-1970s when the country was enjoying an oil boom. Then-president Soeharto dismissed Pertamina president director Ibnu Sutowo in 1976 following a debilitating debt crisis that almost led the company to bankruptcy. Despite the corruption allegations, Ibnu never faced justice, partly due to his close ties with Soeharto.
In his 2016 thesis for a PhD from the London School of Economics and Political Science, Vishnu Juwono wrote that as Pertamina boss, Ibnu "took on the role of the president's political financier, dispensing patronage through non-budgetary financing to their allies in the military, government officials, businessmen and state projects, such as Pertamina Hospital or Soeharto's office, Bina Graha."
Pertamina, as with other huge state-owned enterprises, was a cash cow for the political elite, which is why its top executives were always chosen from among their number.
Various reform measures have been initiated, albeit slowly, within Pertamina since the fall of the New Order. One of the most notable reforms was the establishment of the upstream oil and gas regulatory task force in 2013, which took over the regulatory role that Pertamina had played. The reform allowed Pertamina to focus on business, but it turns out corruption within the company persists.
The efficacy of the reform measures in addressing the issue has been a subject of considerable debate. Sudirman, however, insists that Pertamina is prone to graft because in practice it monopolizes the industry. The company, through Pertamina Patra Niaga, controls 96 percent of the fuel market in the country.
Competition could prevent the kind of abuses that have been going on within the company, oftentimes unpunished. For consumers, competition will ensure they can buy the best products they deserve.
Indeed, Pertamina has a public service obligation to provide energy to the people, but the latest scandal shows that it lacks transparency and accountability and the complex regulations have only created opportunities for corruption and abuse of power.
Pertamina's president director Simon Aloysius Mantiri has apologized to the public for the graft case and promised the company will adhere to good corporate governance. In the next few days or weeks, heads must roll in Pertamina or even the cabinet, but those will not be enough to restore public trust. Greater competition in the sales and distribution of fuels might do so.
Source: https://www.thejakartapost.com/opinion/2025/03/05/monopoly-harms-pertamina.htm