April 12, 2018 / 4:52 AM / 11 days ago

Pertamina acquires PGN to become Indonesian energy holding company

JAKARTA (Reuters) - Indonesia’s minister for state-owned enterprises approved on Wednesday the transfer of a 56.96 pct stake in state gas utility Perusahaan Gas Negara (PGN)(PGAS.JK) to Pertamina.

PHILE PHOTO: A view of state-owned oil giant Pertamina's refinery unit IV in Cilacap, Central Java, Indonesia January 13, 2016. REUTERS/Darren Whiteside/File Photo

The takeover of PGN by Pertamina dates back to at least 2013 and is aimed at simplifying the management of gas infrastructure in Indonesia.

The plan involves forming a new energy holding company, which Harry Fajar Sampurno, who heads mining and strategic industries at the State-owned Enterprise Ministry, said would be effective immediately.

“The formation of the state-owned oil and gas holding company became legal with the signing of the share transfer agreement,” Sampurno said.

With the transfer, PGN will become a “sub-holding” company under Pertamina, managing gas from midstream to distribution and marketing, Sampurno told a press conference.

As part of the transition, PGN will acquire Pertamina’s gas unit, Pertagas, he added.

Pertamina Human Resources Director Nicke Widyawati said the changes would strengthen Pertamina and PGN’s finances, allowing them to expand investment and “create more value.”

By reducing competition between the two gas companies “that have traditionally been competing”, the integration will improve efficiency and expand their coverage, Widyawati said on Wednesday.

“This whole time the focus has mainly been in Sumatra and Java, and we want to expand midstream and downstream infrastructure to central and eastern Indonesia,” she added.

PGN President Director Jobi Triananda Hasjim said the transition would still take some time as the value of the Pertagas acquisition by PGN still needed to be calculated.

“The first step will be to immediately meet with the management of Pertagas (to discuss) which of their assets can be operated together and to prevent duplication,” Hasjim told reporters.

“We will look for quick wins first - which infrastructure can be built more quickly with this oil and gas holding company.”

    Reporting by Jakarta bureau; Writing by Fergus Jensen; Editing by Christian Schmollinger and Susan Fenton

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