Energy ministry categorically denies KBC graft accusations

The Jakarta Post, Jakarta

The Ministry of Energy and Mineral Resources denied on Friday accusations of graft involving Minister Purnomo Yusgiantoro.

The ministry was responding to a report published in this daily on Thursday regarding demands raised by a number of Indonesian professional groups that the authorities investigate the minister in connection with the Karaha Bodas geothermal power project.

Among the groups, the Indonesian Advocacy Reform Institute (LARI) alleges that Purnomo was among those who received a share of a US$10 million "commitment fee" paid by the Karaha Bodas Company (KBC), the main investor in the aborted geothermal power plant, to parties involved in the deal.

At the time, Purnomo headed an expert group at the ministry known as the Geothermal Implementation Team.

"Allegations that Purnomo Yusgiantoro received US$10 million are not true, and evidence is needed to support such claims," ministry spokesman Sutisna Prawira said in a letter sent to The Jakarta Post.

He said that in 1990 Purnomo was a member of a team hired by consultancy firm PT Persada Adhi Cipta, for which he was paid a honorarium. This firm was then commissioned by PT Sumarah Dayasakti, which owns a 10 percent stake in KBC, to do a feasibility study on geothermal development, Sutisna said.

In 1994 Purnomo was appointed head of the Geothermal Implementation Team at the ministry based on a ministerial decree. Sutisna said the team was tasked with producing written reports on geothermal energy development programs for the minister and a steering committee comprising echelon one officials.

"The implementation team was not tasked with conducting negotiations," Sutisna wrote.

Purnomo has also denied the allegations.

The government has been engaged in a protracted legal battle since 1998 with KBC, which accuses the government of breach of contract by stopping the power project that year. In 1997 at the beginning of the economic crisis, the government complied with a recommendation from the International Monetary Fund to postpone the construction of a number of infrastructure projects, including the KBC power project.