INDONESIA - Profile - Megawati Sukarnoputri (Mega).

A housewife-turned politician and daughter of Sukarno, Mega succeeded Abdurrahman Wahid as the fifth President of Indonesia on July 23, 2001, after the latter was impeached. She had served as vice president under Wahid, having been elected to the post on Oct. 21, 1999. Under Wahid, an erratic ruler and jokester who once called her "stupid", she was not able to assume her role of managing the government on day-to-day basis since he delegated this authority on Aug. 7, 2000.

On March 12, 2001, as about 12,000 protesters surrounded the presidential palace and demanded his downfall, Wahid issued a two-paragraph statement announcing that Mega would "take a more active role in making decisions in the fields of economics, society and security". The move was too little, too late, and the Indonesian public could no longer tolerate Wahid - who had become both physically and mentally incapable of ruling. He could only walk with assistance from two people and he was barely lucid.

After Mega took over, she faced a huge challenge in trying to keep a vast and diverse country united. Rebellion was brewing in Aceh and other provinces, and the break up of Indonesia into several countries appeared feasible. Yet she has managed over the past one and a half years to stabilise the situation - both politically and economically. Although the political and economic prospects facing the country remain challenging, there is no longer much talk about the disintegration of Indonesia.

Despite an image as a person not very capable in an executive or administrative role, and of being publicity shy, Megawati has proved to be up to the task of the presidency. Senior officials from her party, the Indonesian Democratic Party-Struggle (PDI-P), say she has brought a "maternal" and conciliatory approach to politics in the country. She is known for her integrity, for making a deal and sticking with it.

In terms of the hydrocarbon sector, Mega has instituted the most fundamental reforms seen in the country since Pertamina was founded. After the House of Representatives passed Law No. 22 on Oct. 23, 2001 - by a wide majority - there was fairly intense criticism of the law from various quarters within the country. This led to speculation that, keeping political considerations in mind, Mega would not sign the law into effect. But she did so one month later, as mandated by the constitution.

Under Law No 22, Pertamina will be transformed into a limited liability, or "persero", company within a period of two years, i.e. November 2003. The new legislation replaces Law No 8 of 1971, which had set up Pertamina as a state firm with "special privileges" - in other words having a monopoly over Indonesia's downstream sector and representing the government in upstream contracts. Following Pertamina's transformation into a persero in 2003, it is expected to remain wholly government-owned for another one to two years. At the end of this period, the state would evaluate Pertamina's performance as a persero and then decide on sale of its stake.

With the promulgation of Law No 22, in addition to Law No. 8 the following laws are no longer applicable: Law No 44/1960, concerning natural oil and gas mining; and Law No 15/1962 concerning the obligation of oil companies to meet domestic requirements. Existing production sharing and other upstream contracts would remain applicable until their expiration.

On July 16, 2002, Mega signed a regulation to set up a new upstream body under Law No 22. As the first of six regulations required to implement the law, it paves the way for the creation of an independent "Management Body" (Badan Pelaksana), to direct and supervise upstream activities - a function hitherto performed by Pertamina. The Management Body will supervise all oil and gas E&P activities. It will also be responsible for offering and awarding new blocks, and inking the contracts on behalf of the government. According to Law No 22: "With the establishment of the Management Body, all rights, obligations and consequences of the Production Sharing Contracts between Pertamina and other parties shall be transferred to the Management Body".

Mega founded the Indonesian Democratic Party-Struggle (PDI-P) in the 1990s and, as PDI-P chairwoman, challenged Suharto's rule. Her party played a major role in the downfall of Suharto and then became the largest block in parliament. PDI-P was the biggest winner in the June 1999 elections. But Wahid manipulated the situation in his favour in the October 1999 presidential election, and on Oct. 21 Mega was elected to the mainly ceremonial post of vice president (see detailed profile of Megawati Sukarnoputri in APS Review Vol. 56, No. 12).

Purnomo Yusgiantoro: The Mining and Energy Minister since Wahid reshuffled the cabinet on Aug. 23, 2000, Purnomo succeeded Rtd. Gen. Susilo Bambang Yudhoyono. He was retained in the position by Mega but the powers of his ministry, which used to be extensive, have been overshadowed by changes taking place in the hydrocarbon sector and by the creation of powerful new links in the decision making chain for oil and gas.

Born in 1951 in Semarang, Java, Purnomo graduated from Bandung's prestigious Institute of Technology, where it was said he received a scholarship from Total (now TotalFinaElf) of France. He then pursued a doctorate at the world-renowned Colorado School of Mines and now is regarded as one of the faculty's distinguished alumni.

Purnomo began his career at the Energy and Mineral Resources Ministry as an expert staffer. From 1990 to 1992 he worked as an energy consultant at the World Bank. He was also an energy consultant to the Asian Development Bank. Later he rejoined the Energy and Mineral Resources Ministry and in 1996 he became Indonesia's governor at OPEC, a position he held until 1998. Later he became advisor to then Energy and Mineral Resources Minister Kuntoro Mangkusubroto.

Late in 1999 Purnomo joined the military think-tank, National Resilience Institute (Lemhanas), as its deputy head. His work impressed the political leadership and caught then President Wahid's attention. Shortly after his appointment as minister, Purnomo began studying the Oil and Gas Bill submitted to parliament (which was to become eventually Law No. 22), under which Pertamina was to lose control over E&P negotiations with other companies and production sharing contracts as well as its monopoly in the downstream sector (see Baihaki Hakim profile).

Purnomo also met with Pertamina's high executives and discussed the future of the company based on the bill. He was in favour of the changes that enhanced the role of the Directorate General of Oil and Gas (MIGAS), which was within Purnomo's ministerial jurisdiction at the beginning of 2001. Pertamina thus began helping MIGAS in the offering of new E&P blocks, in the drafting of production sharing contracts (PSCs) and in negotiations with foreign companies. An outspoken man, Purnomo has pushed plans to offer foreign E&P investors further incentives, believing this is vital to attract more capital and the latest technology into the petroleum sector.

One of the incentives he has considered is to raise the production share of foreign companies under existing PSCs from 15% to 25%.

Purnomo has also said that the government might lift the ring-fencing system, a long-standing gripe of the PSC operators which does not allow income from producing assets to be used on a different concession, adding however: "I'm not making any promises".