March 16, 2017 5:25 pm JST

Pertamina appoints new CEO

Indonesia's largest company ends speculation after sudden ouster of prior chief

WATARU SUZUKI, Nikkei staff writer

Elia Massa Manik ( Photo by Bobby Nugroho)

JAKARTA -- Pertamina on Thursday appointed Elia Massa Manik, the former head of state-owned plantation company Perkebunan Nusantara III, as its new CEO, ending more than a month of speculation following the sudden dismissal of the former chief of Indonesia's state-owned oil giant.

The government officially approved the appointment at a shareholders meeting on Thursday. Manik was chosen from among several candidates, with the decision involving various ministries and Indonesian President Joko Widodo. With a dominant position in domestic retail fuel sales and oil processing, Pertamina is the country's largest company by revenue and is at the core of Indonesia's energy policy.

"I will look into how to accelerate programs to support Indonesia's energy sovereignty," Manik told reporters on Thursday.

Manik has held various positions in both the private and state-owned sectors, including food giant Indofood Sukses Makmur and industrial park developer Jababeka. As the president from 2011 to 2014 of Pertamina subsidiary Elnusa, an oil and gas services company, he was credited with steering the loss-making company back to profit. Just before this latest appointment, he served as president of Perkebunan Nusantara III, a holding for several state-owned plantation companies.

Gatot Trihargo, a deputy for the state enterprise minister, said Manik's appointment was partially based on his performance while leading Perkebunan Nusantara III. "The reforms introduced [by Manik] have returned banking institutions' confidence in [the company], which results in its improved performance."

His posting is seen as a way to continue Pertamina's reform agenda while preserving its corporate culture. Manik will replace renewable energy director Yenni Andayani, who became acting CEO following the dismissal of Dwi Soetjipto in early February.

Soetjipto, appointed shortly after Widodo took office in October 2014, had a reputation for being clean and reform-minded. But his fraught relationship with the deputy CEO, a position that was newly established in October, led to dysfunctional management, according to the state-owned enterprises ministry. The deputy, Ahmad Bambang, was also dismissed, and the position was abolished.

Manik said he will push for better transparency in Pertamina to prevent similar incidents in the future.

"I will make improvements and conduct reforms in Pertamina ... One of the key solutions is transparency, including among the directors. We will make Pertamina more transparent in running its business."

The management shake-up highlights the challenges of carrying out Widodo's energy sector reforms, which he began by scrapping gasoline subsidies from 2015.

Since becoming a net oil importer in the early 2000s, Indonesia has seen oil imports increase as domestic refining capacity is unable to meet rising domestic demand for fuel. Pertamina recently agreed to jointly invest $6 billion with Saudi Aramco to upgrade the former's refinery in Central Java. With a plan to more than double its refining capacity to 2.3 million barrels per day by 2025, the new chief will be tasked with finding partners that can invest in large refinery projects at a time when a long slide in oil prices has dented investor appetite.

Nikkei staff writers Bobby Nugroho and Erwida Maulia contributed to this story

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