Caltex 'made dubious $190m business deal'
By Johannes Simbolon
JAKARTA (JP): PT Caltex Pacific Indonesia oil company has awarded a US$190 million cogeneration plant project to a company linked with Faisal Abda'oe, former president of state oil and gas company Pertamina, without competitive bidding, a Pertamina official disclosed on Friday.
The Pertamina executive, who insisted on anonymity, told The Jakarta Post that PT Mandau Cipta Tenaga Nusantara, which is building a 300-Megawatt cogeneration plant in Riau province to support Caltex's oil operation, is partly owned by Faisal's son, Reza Abda'oe, through PT Nusagalih Nusantara.
Caltex's spokesman Ketut Irawan first confirmed the Pertamina official's statement but he later recanted.
"I first thought he was a co-owner of Mandau Cipta because I often saw him (Reza) in the company's office. But upon checking, I found that the company's statutes do not mention his name," Ketut told the Post.
Ketut said PT Nusagalih owned only 5 percent of Mandau Cipta with the remainder being held by American companies Chevron (47.5 percent) and Texaco (47.5 percent). Both are shareholders in Caltex.
But according to the Pertamina official, Mandau Cipta is 20 percent owned by Nusagalih, which is controlled by Faisal and the Serangan Umum 1 Maret Foundation.
The foundation was formerly chaired by Faisal and is linked to former president Soeharto.
Ketut confirmed that the project was awarded to Mandau Cipta without competitive bidding in August, 1997 when Faisal was still Pertamina president.
"But the deal was done with prior approval from Pertamina and was processed through all the necessary channels," he asserted.
Ketut said Caltex and Pertamina signed a memorandum of understanding (MOU) on Aug. 26, 1997 to appoint Mandau Cipta to develop the cogeneration plant, but he refused to name the Pertamina official who signed the MOU.
Faisal served as Pertamina's president for two periods from 1988 to Jan. 1998.
Ketut denied that Faisal is a partner in Nusagalih but he confirmed that the Serangan Umum 1 Maret foundation initially had a stake in the company.
"But a businessman, Harsudi Supandi, later took over the foundation's stake and became the controlling shareholder in the company," he added.
Analysts said the Duri cogeneration plant project would decrease the government's earnings from Caltex's oil operation because it would raise Caltex's production costs.
Under the production sharing contract (PSC), the government is entitled to 89.7 percent of the incomes from the sales of Caltex's oil after the contractor recovers its expenditure for oil production.
The cogeneration plant's revenues will be shared by Caltex's holding companies but not the government since it does not have any stake in Mandau Cipta.
Analysts argued the government could maintain the level of its earnings from Caltex's oil production if the cogeneration plant was built by Caltex, given PSC's stipulation that the government holds titles to all production facilities built by Caltex.
Caltex accounts for about 60 percent of the country's oil output of 1.28 million barrels per day (bpd).
The country's largest cogeneration plant, scheduled for completion in 2000, will supply power and steam to support oil production at Caltex's steamflood operation in Duri.
Cogeneration is a fuel-efficient and environmentally friendly process that will produce electricity and steam simultaneously from natural gas.
Different from a common gas-fired power plant which can only turn 30 percent of the gas into power and discharges the rest in wasted energy, a cogeneration plant can produce power as well as further process most of the wasted energy into thermal energy for heating and cooling needs.
The steam that will be produced at the Duri cogeneration plant will be pumped into the Duri oil wells to force crude oil flow out.
The Duri cogeneration plant will be fed with natural gas being piped from the Corridor block owned by Canada's Gulf Resources in Grissik, Musi Banyuasin, South Sumatra.
The plant will be operated by Amoseas Indonesia, a Caltex sister company, which will supply power to Caltex at rates well below those charged by most private power companies in Java and Sumatra.
-- Johannes Simbolon