Antigraft drive could save govt more than $1b

JAKARTA (JP): State Minister of the Empowerment of State Enterprises Tanri Abeng said on Wednesday that the government could save more than US$1 billion from anticorruption measures launched in state companies.

Tanri said that his office had found 167 projects in state companies (outside the oil and gas sector), which could involve "KKN", the popular acronym for corruption, collusion and nepotism.

Of the 167 projects, Tanri said, 70 had been annulled, 29 were being renegotiated and restructured, 66 had been transferred to the Finance Comptroller Agency (BPKP) for further investigation, and the remaining two were proceeding after the corrupt elements had been removed.

"The government's efforts to eradicate corrupt contracts in state enterprises could save Rp 400 billion (US$53.33 million) and $1 billion in costs," he told a hearing with House of Representatives' Commission VIII for the state budget and finance, research and technology affairs.

Most of the contracts cut by the government were linked to former president Soeharto's children and close friends.

State oil and gas company Pertamina has also terminated dozens of contracts, most of which were given to companies linked to the former's leader's family and friends.

The government has come under increasing public pressure to combat graft practices following the downfall of former president Soeharto, who has been widely charged of enriching his family and close friends during his 32 years in power.

PLN

Tanri said the government would likely suffer huge losses worth Rp 97 trillion ($12.93 billion) by 2003 if state electricity firm PT PLN failed to undertake a major financial and management restructuring to cope with the current crisis.

"If PLN does not undertake any financial and management restructuring, the government will suffer Rp 97 trillion in lost revenue by 2003," he told the hearing.

He said the restructuring process should include renegotiating the 26 power purchasing agreements (PPA) with private independent power producers, capital restructuring and the establishment of small business units throughout the country.

Possible options for capital restructuring would be made through converting PLN's short-term debts into longer-term obligations or converting the government's loans into equity, he said.

"Only with such a major restructuring program, will PLN survive. Otherwise it will collapse," he said.

PLN, which recorded a net profit of Rp 1.2 trillion in 1996, booked a net loss of Rp 600 billion in 1997 and reported a net loss of Rp 6.5 trillion in the first quarter of this year.

The company incurs costs in dollars yet sells power at subsidized rates in rupiah. With the rupiah losing almost 52 percent of its value against the American dollar in the past 12 months, it is now in dire financial straits.

At the hearing, Tanri also said that the government's target to raise $1.5 billion from its privatization program this fiscal year would be difficult to achieve.

The government was planning to privatize 12 state companies to raise about $1.5 billion in the current fiscal year, which will end in March. But it later scaled down the number to seven firms due to the bearish market.

The government has raised $114 million from the sale of its 14 percent stake in cement maker PT Semen Gresik to Mexico's Cemex in October.

Cemex was also given an option to raise its stake to 25 percent through a tender process on the Jakarta Stock Exchange (JSX).

The government is currently offering a 14 percent stake in international telecommunications provider PT Indosat. (aly)