Government to honor oil, mining contracts

Government to honor oil, mining contracts

JAKARTA (JP): Minister of Mines and Energy Kuntoro
Mangkusubroto said yesterday that all contracts signed by the
ministry would be honored, including contracts of work in the
mining sector and production-sharing contracts in the oil sector.

"The mines and energy ministry will not change agreements that
have been signed," Kuntoro told reporters.

"We believe a good investment climate can only be created if
businesspeople feel confident about agreements that have been
made," he said.

Kuntoro noted that there have been growing demands for the
government to review all contracts and agreements made in the
past, apparently referring to the public's demand for a review of
all contracts obtained by former president Soeharto's family and
cronies.

The ministry will not review its contracts with any private
companies as long as the contracts were processed and signed in
accordance with the existing regulations.

However, Kuntoro recently ordered state oil and gas company
Pertamina to review all its contracts which were obtained by
companies through political and familial connection as well as
other unsavory business practices, including corruption and
nepotism.

Pertamina president Soegianto recently said it had thus far
registered 120 companies whose contracts would be reviewed, most
of which were linked to Soeharto's family and cronies.

Pertamina has long had a reputation as the country's worst
symbol of nepotism due to its domination by Soeharto's family and
cronies, sometimes in partnership with foreign investors.

Soeharto's family and cronies have enjoyed exclusive rights to
import fuel and crude oil for decades. They also control
contracts for the shipment of crude oil, fuel and liquefied
natural gas (LNG) to export markets and for the development of
LNG plants throughout the country.

As far as partnership between Soeharto's family and cronies
and foreign investors are concerned, there have also been calls
from the public for the government to require foreign investors
to replace their partners.

But Kuntoro said the government would not intervene in the
internal affairs of those partnerships.

"The ministry will not intervene in contracts and agreements
made by businesspeople with each other, and everything will be
referred to their agreements," Kuntoro said.

He said the ministry was committed to the nationwide
anticollusion, corruption and nepotism campaigns but believed the
campaigns should be conducted in accordance with the existing
laws and transparently.

"All people should be treated with a presumption of innocence
and in compliance with the law," Kuntoro said. (jsk)