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)