Baihaki defends tanker purchase
Baihaki defends tanker purchase
The Jakarta Post, Jakarta
Former president director of state oil and gas firm PT Pertamina
Baihaki Hakim said the reason for purchasing giant tankers was to
reduce the dependency on chartered tankers and free the company
from being dictated to by a tanker cartel.
"Owning the tankers would make Pertamina independent. It would
not be dictated to and controlled by the tanker cartel," Baihaki
said on Thursday at the office of the government-sanctioned
Corruption Eradication Commission (KPK).
Baihaki said earlier that owning the tankers would produce
savings on fuel transportation costs of up to US$7 million per
year.
In 2002, Pertamina (under the management of Baihaki) purchased
two Very Large Crude Carriers (VLCCs), which are currently still
being constructed by South Korea's Hyundai Heavy Industries, at a
cost of US$130 million.
But the new management under Ariffi Nawawi, who replaced
Baihaki last year, decided to sell the tankers, arguing that it
would be cheaper to lease rather than own them, and that the
divestment was crucial to resolving the company's cash flow
problems.
Bermuda-based Frontline Ltd. has bought the two VLCCs for a
total $184 million.
The divestment has become controversial amid allegations of
high-level corruption and collusion. Suspicion exists that the
divestment was aimed to allow a tanker "mafia" (mostly comprising
local influential businesspeople) to continue to reap huge
profits from Pertamina by forcing the company to charter tankers
at overly high prices.
Auditor PricewaterhouseCoopers found in 1999 irregularities in
Pertamina's shipping division totaling about US$400 million.
A previous report in this paper, quoting a Pertamina document,
has also shown that Frontline was not the top bidder for the
tankers, unlike Indonian Essar Shipping Ltd., although somehow
the former managed to win the tender. To further increase
suspicion, Goldman Sachs, which advised Pertamina in the
transaction, turned out to have a shareholding in Frontline.
The KPK is currently investigating alleged corruption in the
Pertamina tanker divestment.
Elsewhere, Baihaki said that the purchase of the tankers had
been transparent and was carried out via an international bidding
procedure.
He added that purchase of the vessels, each of which could
transport up to two million barrels of crude, would not burden
the company's cash flow.
"The purchase was going to rely on external financing.
Pertamina was to obtain a loan from a South Korean bank. Bond
issuance was also an option for financing," Baihaki explained.
Under Baihaki's leadership, Pertamina had planned to buy 38
tankers within the next few years to renew its aging tanker
fleet, crucial for distributing crude oil and fuel products.
That included the purchase of the two double-hulled VLCCs.
Meanwhile, KPK deputy chairman Erry Riyana Hardjapamekas said
the commission would summon former Pertamina finance director
Ainun Naim next week.
Erry said the commission would seek information from both
former and current directors on possible corruption in the sale.