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The Petitioner’s attorney delivering the subjects of the petition in the preliminary hearing of the judicial review of Law No. 19 of 2003 on State-Owned Enterprises, Monday (10/8) in the Courtroom of the Constitutional Court. Photo by Humas MK/Ifa.

JAKARTA, Public Relations of the Constitutional Court—PT Pertamina’s (Persero) plans to release shares of its subsidiaries through initial public offering (IPO) were challenged by the Federation of Pertamina United Labor Unions (FSPPB) in the Constitutional Court (MK). In petition No. 61/PUU-XVIII/2020, the FSPPB, represented by president Arie Gumilar and secretary general Dicky Firmansyah, challenged Article 77 of Law No. 19 of 2003 on State-Owned Enterprises (BUMN Law). The Petitioner deemed the article ambiguous and multi-interpretive, hence giving opportunities to the privatization of Pertamina subsidiaries.

In a preliminary hearing on Monday, August 10, 2020, the Petitioner’s attorney Janses E. Sihaloho argued that PT Pertamina is a persero (limited liability company), which, based on the amendment to its article of association No. 27 of December 19, 2016, does energy businesses. Therefore, it cannot be privatized based on the provision of Article 77 of the BUMN Law. Its businesses are integrated from upstream to downstream, covering upstream/exploration, processing/refinery, marketing and trading, as well as distribution/transportation and shipping.

The Petitioner stated that to improve competitiveness, increase value, expand business networks, and manage independence of State-Owned Enterprises (BUMN), the government may form a holding company for SOEs/company group/holding companies. One of the ways is to establish sub-holdings and subsidiaries of PT Pertamina as shown in the Decree of Pertamina Board of Directors No. Kpts-18/C00000.2020-SO on the Basic Organizational Structure of PT Pertamina: Subholding Upstream, Refining & Petrochemical, Commercial & Trading, Gas, Power & NRE, and Shipping Co. The privatization of PT Pertamina subsidiaries by the government has been planned to be done through IPO at sub-holding level. PT Pertamina has several subsidiaries: PT Pertamina EP, PT Pertamina Hulu Energi, PT Pertamina Geothermal Energy, PT Pertamina Drilling, and PT PGN. They manage natural resources and do the same businesses as PT Pertamina (Persero).

According to the Petitioner, the businesses of Pertamina subsidiaries’ sub-holdings are carried out in all of PT Pertamina’s core businesses from upstream to downstream so that they become Pertamina subsidiaries. The formation of the sub-holdings allowed the company to trade shares on the stock exchange. Thus, the lack of regulation of limited liability companies or their subsidiaries in Article 77 letters c and d of the BUMN Law means that companies owned by limited liability companies or their subsidiaries in the form of an ordinary Limited Liability Company are allowed to be privatized, even though the companies owned by the persero/subsidiary conduct business activities as referred to in the a quo article. The Petitioner argued that this has resulted in the loss of their constitutional rights. 

"(The absence of these regulations) allows for PT Pertamina (Persero) subsidiaries to be privatized that the state loses its power to control its natural oil and gas resources as well as control over important production branches that control the lives of many people, and become a threat to business continuity and the existence of PT Pertamina (Persero) and its subsidiaries due to the possibility of privatization, which should be prohibited because [the subsidiaries] engage in the management of natural resources and production branches that are important to the state and society," said Janses before the panel of justices led by Constitutional Justice Wahiduddin Adams. 

The Petitioner argued that this resulted in the quality of life and welfare of PT Pertamina (Persero) group’s employees and their families not being guaranteed if PT Pertamina (Persero) subsidiaries are not well-controlled by the state. The idea that natural resources, water, earth, and everything in them be controlled by the state for the greatest prosperity of the people might not be realized because these subsidiaries are managed and controlled by private companies/individuals, only for the prosperity of said companies/individuals.

Legal Facts and Rationale to Be Combined 

Constitutional Justice Saldi Isra explained to the Petitioner’s attorney that legal facts and the rationale of the petition shouldn’t be separated. “Do not add a new section that doesn’t follow the structure of a petition to the Constitutional Court. Please combine the legal facts and the rationale of the petition,” he said.

Constitutional Justice Wahiduddin Adams advised the Petitioner to study the Court’s authorities in the Constitutional Court Regulation and to add “against the 1945 Constitution and not legally binding” in the petitum. He also asked them to elaborate on the definition of persero. Meanwhile, Constitutional Justice Manahan M. P. Sitompul asked the Petitioner to add other laws to strengthen their petition and to clarify the term rejudicial review.

The Petitioner was given 14 working days to revise the petition and submit it by August 24, 2020. (*)

Writer: Nano Tresna Arfana
Editor: Lulu Anjarsari
PR: Lambang S.
Photographer: Ifa D. S.
Translator: Yuniar Widiastuti (NL)

Translation uploaded on 8/11/2020 18:16 WIB

Disclaimer: The original version of the news is in Indonesian. In case where any differences occur between the English and the Indonesian version, the Indonesian version will prevail.

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