PTP Agrintara beset with project delays<\/p>\n
JAKARTA (JP): The state-owned PTP Agrintara may lose billions
\nof rupiah due to the price escalations and delays in the
\ncompletion of its rubber goods factory in Purwakarta, West Java,
\nand palm oil refining and oleochemical plant on Batam island,
\nofficials say.<\/p>\n
Agricultural officials involved in the two projects disclosed
\nto The Jakarta Post that the contract for the construction of the
\nRp 36.9 billion (US$16 million) rubber goods factory, which was
\nsigned in early April 1993, required the project's completion
\nwithin 630 days.<\/p>\n
However, the factory, designed to produce conveyor belts, dock
\nfenders and dams, started production only in January 1996,
\nresulting in at least four months of lost sales revenues and
\nlarger interest costs during construction.<\/p>\n
\"Although the contract did not allow for price escalations,
\nAgrintara's president H. Soeharno approved Rp 7.28 billion in
\nadditional costs last January,\" said an agricultural official who
\nmonitored the project.<\/p>\n
Agrintara was set up in 1991 by the 26 state plantation
\ncompanies (before they were merged into 14 companies in March),
\nas their holding company for developing downstream industries.<\/p>\n
Finance Minister Mar'ie Muhammad decided in 1993 to grant
\nAgrintara quasi-private company status, thereby freeing it from
\nthe arduous procurement procedures imposed on state companies and
\nproviding it more autonomy and operational flexibility to compete
\nwith private companies.<\/p>\n
Agriculture Minister Sjarifudin Baharsjah admitted some delay
\nin the completion of the rubber plant but he argued \"that was
\nbecause Agrintara could not immediately open Letter of Credit
\n(for import procurement) after the signing of the contract.\"<\/p>\n
\"Moreover, the project's engineering design had to be changed
\nto accommodate the latest process technology,\" Sjarifudin told
\nthe Post on Friday.<\/p>\n
He said Agrintara, however, had not paid the contractor the
\nwhole amount of the contract's price.<\/p>\n
Nonetheless, he added, the plant has now been operating and is
\nproducing conveyor belts for the State Electricity Company and is
\nnegotiating a similar deal with the state-owned PT Batubara Bukit
\nAsam coal mining company in South Sumatra, he said.<\/p>\n
\"Agrintara also is negotiating with the Ministry of Public
\nWorks on a deal to manufacture rubber dams,\" Sjarifudin added.<\/p>\n
Soeharno did not respond to repeated requests for comments.<\/p>\n
Project documents show the additional prices granted to the
\ncontractor, PT Mestika Karunia, included Rp 2.35 billion in
\nforeign exchange rate increases.<\/p>\n
\"The additional prices due to the foreign currency
\nappreciation against the rupiah were totally unacceptable because
\nthe job contract clearly stipulated the components of foreign
\nexchange costs consisting of $4.11 million and DM19.50 million,\"
\nthe agricultural official contended.<\/p>\n
Soeharno's memo showed that the remaining price escalation
\nconsisted of Rp 1.3 billion for design changes, Rp 2.32 billion
\nfor land acquisition, and Rp 1.25 billion for additional plant
\nequipment.<\/p>\n
\"The additional costs simply show how unprofessional Agrintara
\nhas been in planning and designing the project. That will
\ncertainly affect the competitiveness of the plant,\" the official
\nadded.<\/p>\n
He also saw the approval of the cost increase, even though the
\ncontract was awarded on a turnkey basis, as preferential
\ntreatment to the contractor.<\/p>\n
\"We have tried our best to ensure that Agrintara's projects
\nwere implemented efficiently and effectively to make their
\nproducts highly competitive,\" commented H.S. Dillon, who until
\nearly this year was a commissioner of Agrintara.<\/p>\n
He refused to be blamed for the problems currently besetting
\nAgrintara's industrial projects and declined to give further
\ncomments, saying he had been discharged from the board of
\ncommissioners.<\/p>\n
But Dillon added he had provided enough data to Agrintara's
\nshareholders meeting on Jan. 25, urging them to undertake
\nfundamental managerial changes in order to ensure project
\nviability.<\/p>\n
Project documents show that the limited tender for the plant
\nproject in February, 1993, got 10 bids from the 13 bidders
\ninvited to take part.<\/p>\n
According to reports on the bid evaluation, PT Mestika
\nKarunia's bid of Rp 37.47 billion was the lowest. The second
\nlowest bidder was PT Kalpataru with Rp 37.48 billion.<\/p>\n
Both PT Kalpataru and PT Mestika are owned or controlled by
\nthe same shareholders, including Burhanuddin as the majority
\nowner.<\/p>\n
Despite the problems with PT Mestika Karunia, Agrintara
\nawarded in April 1995, PT Kalpataru a Rp 52 billion contract for
\nbuilding a palm oil refining, fractionation and oleochemical
\nplant on Batam Island with a daily capacity of 1,000 tons.<\/p>\n
\"I have checked the tender process and it was conducted
\naccording to the set procedures. It was only a coincidence if
\nthe same company won the two contracts,\" Sjarifudin said.<\/p>\n
PT Mitra Lestari Alam, the construction management supervisor
\nhired by Agrintara for the palm oil plant project, reported in
\nFebruary that the completion of the project would be at least
\nseven months behind the March 7, 1996 schedule. By last November
\nonly 6.4 percent of the 85 percent target had been completed.<\/p>\n
However, the delay seemed not to have discouraged Soeharno
\nfrom awarding a repeat order to PT Kalpataru to build the second
\nline near the first plant at a cost of Rp 45 billion.<\/p>\n
Sjarifudin recommended to the finance minister in April, 1995
\nthat Agrintara be granted a concessional loan (12 percent
\ninterest) to finance the second palm oil refinery in Batam.<\/p>\n
But Mar'ie turned down the request, asking instead Agrintara
\nto use commercial loans. (vin)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ptp-agrintara-beset-with-project-delays-1447893297",
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