Govt swears to root out KKN in power contracts

JAKARTA (JP): Minister of Mines and Energy Kuntoro Mangkusubroto has pledged that the government will stamp out all traces of corruption, collusion and nepotism in the awarding of power projects to independent power companies.

"No question about that. We shall eliminate elements of KKN in the power contracts," Kuntoro said on Tuesday after delivering a speech at a business luncheon organized by the Indonesian Business Circle.

KKN is the Indonesian abbreviation for corruption, collusion and nepotism.

Kuntoro said a cross-ministerial team -- formed by President B.J. Habibie on Sept. 11 to restructure state-owned electricity company PT PLN and renegotiate its power purchase agreements with independent power producers -- had to yet to devise concrete steps for the action.

Even before the crisis hit the country last year, the power purchase agreements had become a major source of public controversy because they were said to have benefited only the independent power companies.

With the sharp plunge of the rupiah against the U.S. dollar, the deals -- which required PLN to buy the power from the independent producers in U.S. dollars -- worsened PLN's position because the price of the power was far higher than its retail price in rupiah terms.

Asked if the independent power producers would be ordered to sever ties with local partners implicated in corruption, collusion and nepotism practices, Kuntoro responded: "Maybe."

PLN has signed power purchase agreements with 26 independent power producers, most of which are joint consortiums of international power companies and former president Soeharto's family -- including Siti Hardiyanti Rukmana, Bambang Trihatmodjo, Hutomo "Tommy" Mandala Putra, Siti Hediati Prabowo, Sigit Harjojudanto and Sudwikatmono -- and close associates like Hashim Djojohadikusumo and Mohamad "Bob" Hasan. Many partners also have links to military-affiliated foundations like Kartika Eka Paksi and Himpurna.

Analysts charge the Who's Who of Soeharto associates leaves the unsavory impression that the projects are among the country's most blatant legacies of nepotism and collusion from the Soeharto era.

According to PLN data, most of the contracts were awarded without competitive bidding.

PLN's former president Djiteng Marsudi said earlier this year that he was "coerced" into signing the contracts.

Industry sources allege most of the local partners of the power producers received generous shares of between 10 percent to 20 percent from their foreign partners in return for facilitating the acquirement of contracts.

The allegation is difficult to prove.

The government has unilaterally annulled a number of contracts awarded by state companies to Soeharto's family and cronies. (jsk)