Pertamina Expected to Reduce Workforce

Pertamina plans to reduce its work force by more than a third despite the company recognizing, the "drastic step" would have a high social cost, a senior executive says. Pertamina upstream director Iin Arifin Takhyan said that 10,000 jobs would go, reducing the workforce to 16,000. Some 2,000 employees would be let go every year as part of moves to form a limited liability company, Iin said.

"We don't want to take the drastic (downsizing) steps as it will spark a higher social cost," he stated. He added the company would also limit its recruitment program to help reach its retrenchment target.

Under the new oil and gas law, which came into force in November, Pertamina will lose its decade-long monopoly in the country's oil and gas sector and must transform to a limited liability company in two years. The transformation process is aimed at making Pertamina more efficient and profitable. For decades Pertamina has been known as a company which has too many employees and one that has been plagued with corruption. Under its transformation plan, Pertamina expects to form a holding company, not only for several subsidiaries in upstream and downstream activities in the oil and gas sector, but also for geothermal power plants and petrochemical plants.

In the long term, Pertamina also plans to float shares on the stock exchange. Iin said its management production sharing unit would likely to be transferred to a special body called the executive board. "This means the workers will also be transferred to the executive board," he added. The executive board is an independent body which will be established in a year by the government to replace Pertamina's role in supervising the upstream oil sector following the implementation of the new oil and gas law.