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)