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.