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State enterprises enjoyed improved performance despite lingering clouds of controversy, and the State Enterprises Ministry expects that upswing to continue in the coming years.

Ministry Secretary Mahmudin Yasin said during a year-end news conference on Friday that the country’s state enterprises posted an estimated Rp 94 trillion ($10.4 billion) profit in 2010, driven mainly by stellar performances by its companies during the fourth quarter.

“Even though some of our big companies such as state oil and gas company Pertamina and state electricity company PLN revised down their targets, overall performance was still strong,” he said.

Non-listed state firms posted a combined profit of Rp 84.7 trillion for the year, Yassin said, citing ministry data as of Dec. 29. He said listed companies would contribute an estimated Rp 7 trillion in the fourth quarter, Rp 4 trillion coming from Bank Mandiri and Bank Raykat Indonesia.

The State Enterprises Ministry oversees 142 state firms.

Yasin said the energy sector remained the ministry’s biggest contributor with Rp 33.26 trillion, followed by the banking sector with a combined profit of Rp 16.5 trillion and the telecommunications sector with Rp 11.95 trillion.

Last year also saw an improvement in ailing state companies. The number of state enterprises that posted losses declined to 17 with combined losses of Rp 700 billion, down from 24 companies and a combined Rp 1.67 trillion loss in 2009.

“The ministry is targeting that this year the number will be reduced to only five companies and zero by 2012,” Yassin said, referring to the number of loss-making firms.

The ministry previously forecast that some state companies may have failed to meet their full-year targets as several revised down their profit targets. Pertamina scaled back its profit target to Rp 15.3 trillion from its original forecast of Rp 25 trillion.

State utility Perusahaan Listrik Negara, or PLN, exceeded its profit target, though. The company reportedly posted net profit of Rp 13.68 trillion last year, higher than its original forecast of Rp 12 trillion.

Last year also saw controversies involving flagship carrier Garuda Indonesia, PLN, Pertamina and steel maker Krakatau Steel. Garuda delayed plans for an IPO after its profits fell by 80 percent. PLN’s planned electricity rate hike was capped by the House of Representatives at 18 percent and Pertamina withdrew a bid to acquire Medco after coming under government pressure.

Among the most notable controversies was Krakatau Steel’s IPO. Its stellar debut in the stock market in November was marred by suspicions of corruption. Analysts and observers said Krakatau’s share price was intentionally set low, Rp 850 per share, as a sweetheart deal to lawmakers so they could sell the shares when the price went up.

The House has established a working committee to probe the Krakatau claims, and the investigation is ongoing.

Pandu Djajanto, the ministry’s deputy for privatization, said the lesson learned from Krakatau’s IPO was to be careful in pricing and share allocations.

The government hopes to raise funds through rights issues by several banks, including Bank Mandiri. Bank Negara Indonesia raised Rp 10.4 trillion in December from its rights offer, and Bank Mandiri expects to raise as much as Rp 14.4 trillion from its rights offering early this year.

Mustafa Abubakar, the state enterprises minister, said state firms would perform better and continue to contribute significantly to the government in 2011.

“Our priority next year is reducing the number of state companies to 78 from 142 through mergers, acquisitions and the creation of holding companies,” he said, adding that plantation, forestry and construction companies were the ministry’s priority.