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)