Budget for German ships slashed
Budget for German ships slashed
JAKARTA (JP): State Minister for Research and Technology B.J.
Habibie has agreed to slash the US$1.1 billion he proposed to buy
39 German second hand warships to $482 million.
Minister of Finance Mar'ie Muhammad countered that the
government can provide only $319 million, and proposed that costs
can be slashed to meet this figure.
Habibie and Mar'ie presented their stands in separate hearings
with the House of Representatives (DPR) yesterday.
Habibie, who was entrusted by President Soeharto to handle the
purchase of used ships, guaranteed that with the $482 million,
the vessels "can be transferred to the Navy soon."
The $482 million that Habibie proposed would include re-
powering the main engines of 16 corvettes in addition to
refurbishment, staff training, shipping, preparatory work at PT
PAL dock yard and administration.
In the hearing with House Commission X on research and
technology, Habibie said he would keep seeking a $482 million
budget.
The government is trying to dispel the controversy over the
procurement of the vessels which critics say cost far too much
for Cold War relics.
The original $1.1 billion proposal included the cost of the
ships, refurbishment and a range of new facilities to support the
operation of the vessels, which cost between $10 million and
$12.7 million each.
Refurbishment and training which was originally estimated to
cost $263.5 million is to be cut to $238 million and the $64
million for preparatory work at the state-run dock yard PT PAL
slashed to $9.5 million.
Re-powering of the Parchim corvettes which was to cost $63.7
million is to be scrapped. So is the plan to buy two tankers
worth $40 million and development of a $151 million Navy base in
Teluk Ratai.
Indonesia is purchasing 16 Parchim corvettes, 9 Kondor mine
sweepers and 14 Frosch tank landers from the former arsenals of
East Germany. So far, it has taken delivery on 17 of them.
Mar'ie said in a hearing with House Commission VII on finance
the decision to lower the budget to $319 million was taken in a
meeting between related ministers, including himself and Habibie.
He said the government meant to implement the project in
phases because of financial constraints.
To protect Indonesia's foreign exchange reserves, $223 million
of the funds would be obtained from Kreditanstalt Fur
Wiederaufbouw in semi-soft loans. Bank Indonesia will pay the
remaining $96 million, he said.
Defensive
The procurement of the ships has put Habibie, who also chairs
the Agency for Assessment and Application of Technology (BPPT)
and The Agency for Development of Strategic Industries (BPIS), on
the defensive.
He dismissed charges yesterday that the vessels are too old
and hardly seaworthy.
Habibie maintains that the ships are still new and will be
combat ready after being refurbished. He said the oldest one had
been in service for only seven years before being mothballed when
the two Germanies united.
Habibie also denied a legislator's allegation that the Armed
Forces (ABRI) was not adequately involved in the process, right
from the early negotiations to the transfer. "BPPT was involved
in the early talks and the final decision was taken by the ABRI
chief," he said. "The Navy was more involved than BPPT."
Amidst the controversy over the budget, one of the tank
landers nearly capsized off the Biscay Bay in Spain last Friday
as it was being delivered from Germany to Indonesia. The ship,
the Teluk Lampung, has been towed to a safe spot and will undergo
repair before resuming its journey, officials said. (pan/fhp)