Antigraft drive could save govt more than $1b

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)