Former PLN boss denies markup allegations

JAKARTA (JP): A former chief of state electricity company PT PLN denied allegations on Thursday that two foreign funded power transmission projects had been marked up.

Former PLN president Djiteng Marsudi said that when he signed the contracts for the two projects in 1998, the price of power transmission equipment was much higher.

"There was no markup, but the market situation then was very different from now," he told reporters at a press briefing.

He was responding to allegations made by current PLN president Kuntoro Mangkusubroto, who has claimed that the two power transmission contracts, which were signed by Djiteng during his term as PLN chief, smacked of corruption.

According to Kuntoro, the power transmission projects in Kediri, East Java and Tasikmalaya in West Java respectively, cost the government 283 percent and 315 percent more than a similar project in Depok.

But Djiteng argued that the contract for the Depok transmission project, which was signed in 1999, was much cheaper because the dearth of government projects in that year had forced contractors to submit low bids to enable them to win the project.

He said that the contracts for the Kediri and Tasikmalaya transmission projects, which were put out to tender some months before the financial crisis hit the country in late 1997, were much more expensive because contractors at that time had many choices of projects.

Djiteng further dismissed allegations that the two contracts were inked without an international tender process being undertaken.

"We held a tender because that was the rule and we followed it," he said. Furthermore, he explained, contractors also took advantage of the fact that they knew PLN urgently needed the two projects.

He said that the development of the power transmission grids in Kediri and Tasikmalaya would result in cost savings of Rp 250 million per day.

At present, Djiteng said, PLN was unable to efficiently distribute electricity from East Java to West Java because the company still relied on the existing power transmission grid.

"Each day of delay in the development of the two projects costs us Rp 250 million," he claimed.

The contractors put in high bids for the two transmission projects because they knew that the urgency of the schemes would force PLN to accept their offers.

The tender for the Tasikmalaya project was won by a consortium made up of PT Ritra Safitri and PT Citacontac and is worth Rp 386.91 billion.

Meanwhile, the Kediri project was won by the consortium of PT PP and PT Indokomas and is worth Rp 342.28 billion.

The two projects are now on hold, as PLN is undecided over whether to proceed with their development.

The state company could either renegotiate, re-tender, or cancel them, depending on whatever decision is taken by the government. (bkm)