Baihaki defends Pertamina's purchase of giant oil tankers
The Jakarta Post, Jakarta
Baihaki Hakim, former president of state oil and gas firm PT Pertamina, defended on Monday the company's earlier purchase of two giant oil tankers, saying it was a profitable long-term investment.
He said the two very large crude carriers (VLCC), which are being built by South Korea's Hyundai Heavy Industries, could save transport costs by up to US$7 million per year.
"When we made the decision, the plan to buy the tankers were economically viable," Baihaki told reporters before a hearing on the matter with House of Representatives Commission VIII, which oversees mining and energy-related issues.
Baihaki added that Pertamina had obtained a relatively low price for the tankers, as the order was made in 2002, when many shipping yards were suffering a decline in business volume.
The hearing was called because Pertamina president Ariffi Nawawi, who succeeded Baihaki last October, planned to sell the two VLCCs.
The shipbuilding contract for the VLCCs was signed in March 2003 and the vessels are scheduled to be completed this July. Each vessel has a capacity of 260,000 deadweight tons and can carry up to 2 million barrels of crude.
The purchase of the two VLCCs was part of the company's plan to expand its tanker fleet and boost efficiency, under which Pertamina is to buy 38 tankers by 2007. Pertamina currently owns 30 tankers and charters 113.
Pertamina had bought six tankers before the new management under Ariffi canceled the purchasing contract for the remaining tankers.
Ariffi has argued that the purchase of the two VLCCs, worth $131 million, was unprofitable, pointing out that operating a VLCC would cost Pertamina $45,000 a day, while leasing the same vessel cost about $20,000 a day.
According to consultant firm Japan Marine Science, however, the operating cost of a VLCC is only $27,697 per day.
Pertamina has opened a tender for the sale of the two vessels, to which 60 interested parties have responded. Goldman Sachs has been appointed as consultant to the tender.
Otto Diwara, chairman of the Pertamina workers union, suspected corruption to be the motive behind the VLCC sales plan, and reported the case to the government-sanctioned Corruption Eradication Commission (KPK).
"We have asked the KPK to order Pertamina's board of directors to stop the sales process," Otto said in a press release on Monday.
The union's suspicion was founded on an audit result by the Development Finance Comptroller (BPKP) and Japan Marine Science on the VLCC purchase.
The comptroller said the purchase was an appropriate step and was made at a reasonable price.
It also said an expansion and rejuvenation of Pertamina's vessel fleet was a must to ensure a secure domestic supply of crude, and that owning their own VLCCs would leverage the firm's bargaining power in the international crude market.