Wed, 23 Feb 2000

Economics team to decide fate of Indorayon

JAKARTA (JP): State Minister of Environment Sonny Keraf said on Tuesday he was waiting for a decision from the Cabinet's economics team over his proposal to close the pulp and rayon plant belonging to PT Inti Indorayon Utama.

"But if the decision laid with me, it would be that Indorayon must be closed," Sonny told The Jakarta Post.

He said "there are no other considerations" which could support the continuation of the company's operation near Lake Toba, in Porsea, North Sumatra.

He said economics ministers under Coordinating Minister for the Economy, Finance and Industry Kwik Kian Gie would make a joint decision on his proposal.

But he did not explain whether a new audit of the plant was needed by the team to decide Indorayon's fate.

State Minister of Investment and State Enterprises Development Laksamana Sukardi outlined a plan to have an independent audit team to determine whether to close or relocate Indorayon's plant.

If the planned audit proceeds, it will be the third after the Environmental Impact Management Agency (Bapedal) and the American auditor, Labat-Anderson, who was appointed by the ministry of industry in 1995.

Indorayon said on Monday that it was ready to be audited and to bear the audit cost but asked the government to give it two months to prepare for it.

Sonny, nevertheless, said earlier that another audit was not necessary because it was too late and would cost the government more as his office had enough proof that the company's operation had caused tremendous environmental damage to the area.


Meanwhile, Sonny also attacked gold and copper mining company PT Freeport Indonesia on Tuesday for what he called a "biased" environmental audit on its operation by American auditor Montgomery Watson.

"The result of Freeport's audit covers up bad things with soft language. For instance, something which did not benefit Freeport was written in the report as Freeport would meet regulations numbered this and that.

"I totally doubt the objectivity of this American auditor Montgomery Watson," he said.

He noted that his office found irregularities in the audit report, especially on the tailing disposal system, environmental management and the environmental work plan.

Because of that, Sonny said his office would audit, and perhaps redo, the environmental impact analysis on Freeport.

Sonny added that the government was forming an interdepartmental team to make a comprehensive analysis on Freeport, not only on its environmental management system but also its compliance with its contracts of work with the government.

"Freeport's problems do not only deal with environmental issues, but also with the contracts of work, and therefore, the government will form a joint team consisting of representatives from the Ministry of Mines and Energy, my office, Bapedal and the Ministry of Finance.

The House of Representatives recommended earlier that the government review Freeport's contracts of work as it suspected the company of violating some terms in them.

Responding to the House recommendation, the mines and energy minister promised that the government would form a team to evaluate Freeport's compliance with its contracts of work.

He also promised to review regulations which could have been used by Freeport as an alibi to not heed articles in the contracts, especially those on divestment requirements. (01/rid)