Former PLN boss denies markup allegations

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)