Bukit Asam severs ties with Soeharto's children

JAKARTA (JP): State coal mining company PT Tambang Batubara Bukit Asam has terminated contracts with five companies linked to former president Soeharto's children as part of its efforts to scrap business deals allegedly landed through corruption, collusion and nepotism.

Company president R.A Sunardi said on Thursday his company had terminated contracts with Klassic Investments Ltd, a trading company owned by Soeharto's second son Bambang Trihatmodjo and PT Prima Coal, owned by Bambang's youngest sister Siti Hutami Endang Adiningsih.

"The contracts were terminated in May and June this year," he said in a hearing with House of Representatives Commission V for industry, mining, trade, manpower, cooperatives and the environment.

Bukit Asam signed contracts with the two companies in 1997. Under the contracts, Klassic Investments and Prima Coal were to market 885,000 metric tons and 200,000 metric tons respectively of Bukit Asam's coal to Malaysia this year. The contracts were due to terminate on Dec. 31, 1998.

Sunardi said that by terminating the two contracts Bukit Asam could save between Rp 45 billion (US$6.2 million) and Rp 55 billion.

Sunardi, however, did not explain what happened to Bukit Asam's contracts with PT Cakrawala Tata Bakti and PT Dwipangga Sakti Prima, other trading companies linked to Soeharto's family.

According to data from the Ministry of Mines and Energy, the two companies were granted contracts to distribute 420,000 metric tons and 155,000 metric tons of Bukit Asam's coal on the domestic market.

Sunardi also said that PT Barito Pacific Timber and PT Citra Lamtoro Gung Persada -- two companies linked to Soeharto's eldest daughter Siti Hardiyanti Rukmana, popularly known as Tutut, have withdrawn from their contracts with Bukit Asam.

He, however, did not explain the contract terms and only said that the prices set by the two companies were well below normal prices.

Sunardi said that in June, his company terminated a contract with PT Ario Seto Wijoyo, a company controlled by Soeharto's grandson Ari Sigit Hardjojudanto for the construction of five coal briquette factories in Serang, West Java; Cilacap and Semarang, Central Java, and two in Gresik, East Java.

Sunardi said the Rp 8.4 billion plant had only been running on 20 percent of its designed capacity due to the poor quality of the machinery installed by Ario Seto.

Sunardi also said that the government's effort to privatize Bukit Asam would not run smoothly because the company still had to sell 90 percent of its produce on the domestic market at artificially low prices.

"Over 70 percent of the coal produced by Bukit Asam was sold to coal-fired power plants owned by state electricity company PT PLN at very low prices, far below the market prices and even below our production costs. In this situation, investors will not be interested in investing their money here," he said.

Sunardi said that his company currently sold its coal at Rp 93,000 per ton to PLN, one-third of the current international price.

"The normal price should be about 5 percent lower than international prices. But in this situation, the large revenue we get from our exports is almost wiped out meeting our losses," he said.

Bukit Asam targeted to mine 12.8 million tons of coal this year. At least 2.8 million tons, or 22 percent of this year's projected output, were to be exported.

The company exports coal to Japan, Malaysia and Thailand.

During the January- October period of this year, the company mined 8.3 million tons of coal, around 1.2 million tons of which were exported. (gis)