Habibie backs Kuntoro on Pertamina

JAKARTA (JP): President B.J. Habibie put his weight behind Minister of Mines and Energy Kuntoro Mangkusubroto over the weekend, and supported the minister's plan to take over contract- awarding rights from state oil and gas company Pertamina.

Kuntoro said the President had turned down a proposal from Pertamina, backed by legislators, that Pertamina, or a new state company to be formed by the government, be responsible for the awarding of contracts.

"The President has stated there is no need to form a new state company to take over the government's (contract-awarding) right from Pertamina.

"The right should be returned to the government. The government has the infrastructure and budget needed to exercise the right," he said after a meeting with the President.

Habibie summoned Kuntoro, Minister of Finance Bambang Subianto, Minister of Industry and Trade Rahardi Ramelan, State Minister of the Empowerment of State Enterprises Tanri Abeng and Minister of Communications Giri Suseno Hadihardjono to discuss the latest developments in the deliberation of the oil and gas bill at the House of Representatives.

Pertamina president Martiono Hadianto was also present at the meeting.

The oil and gas bill currently being debated at the House would lift Pertamina's decades-old monopoly on the country's oil and gas downstream sector.

Under the bill, the government would also take over Pertamina's right to award contracts to oil and gas contractors, as well as its right to manage and regulate the contractors.

The state delegated the mining rights to Pertamina under the 1971 law on Pertamina.

Under the bill, Pertamina would also be transformed into a limited liability company two years after the enactment of the law.

After weeks of debating and lobbying, the House's special team for the deliberation of the bill has agreed with Kuntoro on most items in the bill, except for the contract-awarding right transfer.

Most of the special team's members supported Pertamina's proposal that the contract-awarding right should not be held by the government but Pertamina or a new state company.

The legislators said the government should not make business deals with private companies, to avoid being sued by the companies.

But Kuntoro insisted that the right be returned to the government, saying he would not compromise on the matter.

"The President expressed his view to show the government has one single perception on the issue. We hope the House could listen to that and several factions who remain opposed (to the bill's clause on the contract-awarding right) could understand," Kuntoro said.

Several analysts have predicted that the deliberation of the bill will be deadlocked on the issue.

But Kuntoro said the deliberation would not be deadlocked.

"There is only one strategic issue that has yet to be agreed upon, that is the contract-awarding right issue. God willing, we will come to the end of the deliberation soon," he said.

Kuntoro also said that if the bill was passed into law, Pertamina would be assigned to only finding and extracting oil, while oil transportation would be handled by the Ministry of Communications and the Ministry of Industry and Trade would manage the oil and gas refining process. (prb/gis)