Government to retender 320-km pipeline project

DENPASAR, Bali (JP): The government has annulled the contract awarded to PT Trihasra Binanusa Tunggal, a company owned by former president Soeharto's children, for construction of a 320- kilometer fuel pipeline in Java.

State oil and gas company Pertamina's director for domestic distribution and marketing, Hadi Nugroho, said here on Monday that Coordinating Minister for Development Supervision and Sate Administrative Reforms Hartarto Hadisoemarto had recently canceled the contract at the recommendation of the State Comptroller Agency (BKPP).

The government considered the contract invalid because Trihasra, which is controlled by Soeharto's daughter Siti "Tutut" Hardiyanti Rukmana and her brother Bambang Trihatmodjo, was selected without a competitive bidding process, Hadi said.

"The megaproject will be put into open bidding, but the date has not yet been determined given the monetary crisis," Hadi said on the sidelines of the ceremony to deliver the International Standard Organization (ISO) 9002 certificate to Pertamina's marketing and distribution unit at Ngurah Rai Airport in Denpasar.

The cross-Java fuel pipeline project is aimed at establishing integrated fuel pipelines linking Pertamina's refineries in Java to all major cities on the island.

According to Pertamina data, Trihasra Binanusa Tunggal is 35 percent owned by PT Trihasra Utama Tunggal, a company controlled by Tutut; 35 percent by Bambang's PT Bimantara Citra, and the remaining 30 percent by PT Tranaco.

In 1992, the company signed a build-and-transfer contract with Pertamina for the development of fuel pipelines linking all refineries cross Java and major cities on the island to secure fuel supplies.

Pertamina has refineries in Balongan, West Java, and Cepu and Cilacap in Central Java.

Pertamina built several fuel pipelines in the early 1990s, including a 223-kilometer pipeline linking Cilacap and Rewulu near Yogyakarta and 180-kilometer pipelines between Cilacap and Bandung.

Trihasra first developed a 221-kilometer fuel pipeline from Balongan to Jakarta worth US$80 million. The construction of the pipeline was completed in 1994.

The company planned to expand the pipeline network from Rewulu in Yogyakarta to Semarang, a distance of about 140 kilometers, Balongan to Malangbong near Tasikmalaya in West Java (120 kilometers) and from Sukabumi to Padalarang (60 kilometers).

Hadi said the fuel pipeline expansion project was among dozens of megaprojects postponed by the government in September 1997 as part of its retrenchment efforts to cope with the crisis.

He said earlier the government hoped the expansion project would be completed by 2003, but the time frame had been extended due to the depressed growth in fuel demand on the island amid the crisis.

Pertamina recently announced it ascertained 159 contracts entered into with Soeharto's family and cronies suggesting collusion, corruption and nepotism.

The state company was long associated with Seoharto's family and intimate circle who handsomely profited from the country's oil and gas operations during Soeharto's 32-year rule.

The government has annulled or retendered dozens of projects awarded to Soeharto intimates. (jsk)