Bukit Asam severs ties with Soeharto's children

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withdrawn from their contracts with Bukit Asam.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)