Big Business – President Director of PT Pertamina (Persero) Nicke Widyawati is optimistic that the company can book profits for the whole of this year, even though the company in the first semester of 2020 lost Rp 11 trillion.
Nicke sees that currently fuel consumption in several regions has begun to increase. In July 2020, turnover increased by 9 percent, and the company had an operating profit of 1.2 billion dollars. Even during this period, the loss was reduced to 4.5 trillion IDR.
“With this positive trend, we are confident that we can improve our performance in the second semester of 2020, and can post profits this year,” Nicke said in a written statement on Friday 28. August 2020.
He hopes that the Covid-19 pandemic can be handled properly so that mobility and economy will be better and can encourage increased fuel consumption.
In the first semester of 2020, Pertamina registered a negative financial performance by registering a loss of IDR 11 trillion. Nicke said there were generally three reasons why the company ended up losing money in the first half of this year.
First, the reduction in fuel consumption due to the Covid-19 pandemic. The decline in consumption has led to revenues from the downstream sector falling by 25 per cent compared with the same period last year.
Meanwhile, the decline in fuel sales in large cities in large-scale social restriction period can reach 40 percent to 50 percent under normal conditions. “Downstream contributes 80 percent of Pertamina’s total revenue. Thus, the decline in sales downstream has a significant impact on the company’s revenue,” said Nicke.
Second, the weakening of the rupee against the US dollar. Nicke said that the loss due to this exchange rate difference reached USD 211 million in the first semester of 2020. This is because 93 percent of the company’s capital expenses and operating expenses use dollars, while 80 percent of turnover is in rupiah.
Third, the decline in world oil prices is due to redundant supply. This factor causes the company’s upstream oil and gas revenues to fall by 20 percent. Meanwhile, exploration and exploitation are relatively constant.
“The upstream sector contributes 80 percent of Pertamina’s total profits, so the decline in profitability from the upstream sector has a major impact on Pertamina’s decline in earnings,” said Nicke.