Balongan oil refinery project allegedly marked by US$200 million
Tiarma Siboro The Jakarta Post Jakarta
A joint team investigating suspected corruption in the Balongan oil refinery project in Indramayu, West Java, said on Thursday that the value of the project had been marked up, thereby causing state losses amounting to US$185.58 million and Rp 14.5 billion.
I Putu Kusa, deputy attorney general for economic intelligence, said that Tabrani Ismail, former processing director of state oil company Pertamina, the owner of the project, would be charged as a suspect due to his role in marking up the value of the project.
"Tabrani will be charged as a suspect as he was the one in charge of estimating the project's value at $1.8 billion," Putu said. The real cost of the project was believed to be only about $1.6 billion.
"His estimate caused the state losses amounting to $185.58 million if we look at the difference between the Pertamina estimate and the value of the project as stated in the contract."
"Tabrani also failed to account for Rp 14.5 billion and US$752.9 million in funds classified as other costs," Putu told a press conference at the Attorney General's Office.
Besides Putu, the investigating team consisted of representatives from Pertamina and the Development Finance Comptroller (BPKP).
Putu underlined that his team would also investigate other state officials -- former coordinating minister for the economy, finance and industry/development supervision Radius Prawiro, former minister of mines and energy Ginanjar Kartasasmita, former specialist at the office of the state minister for research and technology Kho Khian Kho and former Pertamina president Faisal Abda'oe -- in connection with their alleged involvement in the case.
Also attending the press conference were the team's coordinator Brig. Gen. (ret) Sartono of Pertamina, Nazrullah Uzamah of the BPKP, and spokesman for the Attorney General's Office Muljohardjo.
The Balongan refinery was built between 1990 and 1995 by a consortium of contractors led by Foster Wheeler of Britain. It has a refining capacity of 125,000 barrels per day.
According to Putu, the project was first discussed by former president Soeharto and former British prime minister Margaret Thatcher during her visit to Indonesia in 1985.
"Thatcher promised at the time that the British government would help finance the project by providing a loan worth $60 million and a $140 million grant. But she insisted that British Petroleum should be the sole buyer of the oil and Foster Wheeler be the leader of the consortium," Putu said.
No explanation was given as to why the British government canceled its financial assistance. But as the project had already been planned, former minister of mines and energy Soebroto decided to continue with it on condition that Foster Wheeler would finance it with Indonesia repaying the cost from the sale of the refinery's products, Putu continued.
According to Putu, Pertamina insisted during its talks with Foster Wheeler that the project cost should not exceed $1.7 billion, but later softened its stance, allegedly based on Kho's estimate that its cost would reach $1.9 billion.
"Kho reportedly said that Pertamina was incapable of handling the project by itself," Putu said.
Putu further said that instead of heeding Pertamina's suggestion, both Ginandjar and Radius decided to approve the project construction contract worth $1.8 billion.
"Ginandjar told the team earlier that his decision was taken due to a request by Soeharto who objected to the halting of the project due to financial problems," Putu said.
Sigit Hardjojudanto, Soeharto's eldest son, is also allegedly implicated in the scandal.
Sigit, however, denied any involvement, saying that he took no active part during the project's negotiation process or when the government approved the construction of the refinery.