AG and BPKP to audit all Pertamina contracts<\/p>\n
JAKARTA (JP): The Attorney General's Office and the
\nDevelopment Finance Comptroller (BPKP) will conduct legal and
\nfinancial audits of contracts between the state oil and gas
\ncompany Pertamina and companies linked to former president
\nSoeharto's family and cronies.<\/p>\n
The House of Representatives's Commission V for industry,
\nmining, trade, manpower, cooperatives and the environment and
\nMinister of Mines and Energy Kuntoro Mangkusubroto agreed
\nyesterday on the urgent need for an overall audit of all of
\nPertamina's contracts.<\/p>\n
\"The audit is to ascertain if the contracts were made through
\nillegal practices,\" the House commission's chief, Marzuki Achmad,
\nsaid.<\/p>\n
Documents produced by the commission show there are at least
\n149 companies linked to Soeharto's family and cronies which are
\ninvolved in Pertamina's operations in the oil and natural gas
\nindustry.<\/p>\n
The documents disclose that the Soeharto family dominates the
\nshipping of liquefied natural gas (LNG), crude oil and fuel, gas
\npipeline network development, geothermal power and the
\ndevelopment of refineries and many other aspects of the
\nhydrocarbon sector.<\/p>\n
One of the companies discussed in the hearing was PT Transjava
\nPipeline, which is 49 percent owned by Soeharto's son Bambang
\nTrihatmodjo, 28 percent by PT Tranaco, 10 percent by Pertamina's
\npension fund, 10 percent by the pension fund of PT Perusahaan
\nListrik Negara (PLN) and 5 percent by PT Adhi Raksa Tama.<\/p>\n
The company has developed a gas pipeline to channel natural
\ngas from the gas field in Kangean, Madura to the fertilizer plant
\nand PLN's power plant in Tuban and Gresik, East Java.<\/p>\n
Pertamina has been using the pipeline under a 20-year
\nbuilding, operation and transfer contract at the cost of 72 U.S.
\ncents per million British thermal units (MMBTU).<\/p>\n
Golkar Legislator Priyo Budi Santoso estimated that the
\ncompany received US$42 million per month in fees.<\/p>\n
He said the fees were too expensive and alleged that Transjava
\nhad marked up its investment in the pipelines on which the
\nexpensive fees had been based.<\/p>\n
\"The price of gas for PLN could be reduced if the pipeline
\nlease fee is cut,\" Priyo said.<\/p>\n
The hearing also touched on the latest move by state
\nelectricity company PLN to unilaterally annul its power purchase
\ncontract with PT Cikarang Listrindo after the latter refused to
\nrenegotiate the contract.<\/p>\n
PLN president Djiteng Marsudi earlier indicated that the
\ncompany was likely to take a similar move against other
\nindependent power producers (IPPs) which refused to renegotiate
\ntheir contracts.<\/p>\n
Marzuki said the House supported PLN's plan to void all
\ncontracts which placed excessive financial burdens on PLN.<\/p>\n
But, he said, in case an outright annulment was impossible,
\nPLN should renegotiate with the IPPs on the contractual terms,
\nincluding power prices, to alleviate PLN's financial problems due
\nto the monetary crisis.<\/p>\n
Kuntoro, however, expressed concern over PLN's unilateral
\ntermination of the contract.<\/p>\n
But he said he would not intervene because PLN, like most
\nother state companies, had been put under the supervision of the
\noffice of the State Minister for the Empowerment of State
\nCompanies.<\/p>\n
\"It's up to PLN (how to treat its contracts). As for other
\ncontracts under the Ministry of Mines and Energy, I have stated
\nthat all the contracts will be honored,\" Kuntoro said.<\/p>\n
The commission and Kuntoro also agreed yesterday to ask the
\nAttorney General's Office to investigate alleged corruption at
\nPertamina's refinery in Balongan, West Java, which has often
\nstopped operations due to alleged technical problems.<\/p>\n
Golkar legislator Djusril Djusan said he had complete data
\nshowing that several officials and Pertamina executives had
\nmarked up the price of the construction of the refinery to $2.4
\nbillion from a normal cost of less than $1.6 billion.<\/p>\n
\"In comparison, in San Francisco where workers and equipment
\nare more expensive than in Indonesia, a refinery with the same
\ncapacity of Balongan costs only $1.6 billion,\" Djusril said.<\/p>\n
The Balongan refinery has a processing capacity of 125,000
\nbarrels per day of crude oil.<\/p>\n
Djusril said the attorney general should investigate the
\nofficials responsible for overseeing the project, including then
\nminister of mines and energy Ginandjar Kartasasmita, then
\nminister of finance J.B. Sumarlin and then Pertamina president
\nFaisal Abda'oe.<\/p>\n
The Balongan refinery was constructed by a group of
\ncontractors, including Japan's JGC Corporation, Foster Wheeler of
\nthe United States and the Far East Trading Corp., an affiliate of
\nPertamina. The construction of the refinery started in 1990.
\n(jsk)<\/p>",
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