Provided that the parent company is efficient and effective, he guaranteed the BPK would support this plan.
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Parliament Building. Donang Wahyu|KATADATA

The government is vigorously promoting the formation of state-owned holding companies. However, Deputy Chairman of Commission VI overseeing State-Owned Enterprises Affairs at the House of Representatives (DPR), Azam Azman Natawijaya, says House must be consulted with on these plans.

Law No. 1/ 2004 concerning the State Treasury states that any change, sale or transfer of government assets exceeding IDR 100 billion must have the approval of the House. Therefore, Azam called on Minister of State-Owned Enterprises (SOE) Rini Soemarno to immediately request the House’s approval.

If the government does not have the approval of the DPR, this plan would be considered in breach of law. “The formation of these holding companies must not be legally flawed,” Azman said after a plenary session at the Parliament building in Senayan, Jakarta, on Thursday (2/6).

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(Read: Pertamina and PGN Form Team to Synergize Investments).

Azam said his commission had held a hearing with experts, who agreed with the DPR on this matter.

As previously reported, the government is currently drafting a government regulation on the establishment of holding company in the energy sector. State-owned oil and gas firm Pertamina has been selected as the holding company that will lead the nation’s energy sector. Pertamina and state-owned gas company Perusahaan Gas Negara (PGN) have formed a joint team to prepare for this.

Pertamina’s President Director Dwi Soetjipto said he was waiting for the government to make the necessary arrangements to establish this holding company. Pertamina and PGN have been coordinating while waiting for the government to complete this process. (Read: PGN to be Pertamina SubsidiaryDecides Minister Rini).

The first phase of this formation would have Pertamina and PGN synergize their operations through mutually beneficial assets and investments. “This will be executed along with the Deputy SOE Minister,” Dwi said on Tuesday. SOE Minister Rini Soemarno has not requested for approval, or even discussed this matter, with the House.

Starting this year, Pertamina and PGN will synergize operations by sharing their assets and investments. "This will be implemented together with the Deputy Minister of State-owned Enterprises," said Dwi on Tuesday. SOE Minister Rini Soemarno has not asked for approval, or even discussed this matter with the House.

“If the ministry does not have approval, it would be side stepping Law No. 1/ 2004. As a consequence, the government would be in trouble for issuing a government regulation without consulting the House,” said Azman.

Azman actually agrees with establishing Pertamina as the state-owned holding company for the nation’s energy sector because it would avoid the recurring overlap in the development of gas infrastructure by PGN and Pertamina subsidiary Pertagas. Azman also expects this holding company to lower gas prices.

Supreme Audit Agency official Achsanul Qosasih agreed, saying that provided that the parent company is efficient and effective, he guaranteed the BPK would support this plan. (Read:Pertamina Assets to Increase IDR100 T After Acquiring PGN )

Although the BPK is not involved in the mechanism of the formation of this holding company, it will still be auditing this state asset. “We’ll let you know the results of the audit before and after the holding company,” said Achsanul.