Consortium to compensate Petrobuild for building
Consortium to compensate Petrobuild for building
JAKARTA (JP): The consortium planning to take over the
disputed US$150 million Migas Center building project from PT
Petrobuild Indonesia has agreed to compensate Petrobuild and
include it in the consortium to speed up the delayed project.
Minister of Mines and Energy I.B. Sudjana told a hearing of
House Commission VI for mines, manufacturing and investment
yesterday that the amount of compensation and goodwill should be
negotiated by the two parties.
Sudjana said Petrobuild could convert its compensation and
goodwill into shares in the consortium.
"If the amount of compensation and goodwill is not enough for
Petrobuild's desired share, they should inject fresh funds into
the consortium as equity," Sudjana said.
In 1995 the government canceled Petrobuild's build-operate-
transfer contract to develop the Migas Center, a building for oil
and gas companies, on Jl. M.H. Thamrin, Central Jakarta.
According to the Ministry of Mines and Energy, the contract
was terminated after Petrobuild failed to finance construction
according to schedule.
Petrobuild filed a lawsuit against the government to challenge
its decision to terminate the contract, arguing that it had
enough funds, including a planned syndicated loan from four
domestic banks, to construct the building.
Construction of the building at the site of the former office
of the Directorate General of Oil and Natural Gas was initially
scheduled for completion in March this year.
Last year, before the legal dispute had ended, the ministry
set up a consortium of Pertamina employees' welfare foundations
and Pertamina's pension funds to take over the project.
The government appointed PT Pembangunan Perumahan, a state-
owned property developer, to resume construction of the building.
Sudjana said the consortium had collected US$62 million in
fresh funds to finance construction.
"We hope the construction works will resume soon," Sudjana
said.
He suggested that Petrobuild join the consortium to expedite
construction of the planned 32-story building, which stalled in
1995.
Petrobuild president Syarief Tando said he welcomed the
consortium's offer. "I have been suggesting for a long time that
we should meet and find a way out."
Syarief said that, although Petrobuild had invested some money
in the project, he would rather continue it than receive
compensation.
Petrobuild had sub-contracted PT Ballast Indonesia to help
construct the building.
Ballast Indonesia has asked the government to clarify the
project's status and its dispute with Petrobuild.
Ballast said it had spent more than Rp 25 billion (US$10.4
million) on piling works for the project but received less than
half its money from Petrobuild.
Syarief said he would not meet all of Ballast's costs while
the project's status was unclear.
The plan to develop the oil and gas center to house the
offices of oil companies and the directorate general was
conceived in the 1980s.
But the idea only developed into a concrete project in early
1993 with the full support of the then minister of mines and
energy, Ginandjar Kartasasmita, who witnessed Petrobuild's
contract with the government. (rid)